The Bridge Builders Company has undertaken the reconstruction of the Flat River for the NWA. The...

 

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The Bridge Builders Company has undertaken the reconstruction of the Flat River for the NWA. The value of the contract is $2,000,000 and was completed in the contractors same accounting year. The contractors have given the contract number 1275 for reference, and the following are the details as shown in the books: Labour on site Materials purchased 64,000 Materials issued from store 1,255,000 Material returned to store Plant Upkeep Account-hire and use of plant 32,000 Direct expenses $ 30,000 General overhead apportioned to this contract 10,000 Materials on hand December 31 5,000 Direct expenses prepaid 12,000 Value of work certified by the council's surveyor 1,300,000 Cash received on account 280,000 12,000 1,200,000 Required: (a) Prepare the contract 1275 account as at December 31, 2019. (13 marks) (b) Prepare the contract P&L account for the year ended December 31, 2019.(5 marks) (c) Prepare the Contractee Account as at December 31, 2019. (5 marks) (d) Explain the term 'notional profit' based the above exercise (2 marks) The Bridge Builders Company has undertaken the reconstruction of the Flat River for the NWA. The value of the contract is $2,000,000 and was completed in the contractors same accounting year. The contractors have given the contract number 1275 for reference, and the following are the details as shown in the books: Labour on site Materials purchased 64,000 Materials issued from store 1,255,000 Material returned to store Plant Upkeep Account-hire and use of plant 32,000 Direct expenses $ 30,000 General overhead apportioned to this contract 10,000 Materials on hand December 31 5,000 Direct expenses prepaid 12,000 Value of work certified by the council's surveyor 1,300,000 Cash received on account 280,000 12,000 1,200,000 Required: (a) Prepare the contract 1275 account as at December 31, 2019. (13 marks) (b) Prepare the contract P&L account for the year ended December 31, 2019.(5 marks) (c) Prepare the Contractee Account as at December 31, 2019. (5 marks) (d) Explain the term 'notional profit' based the above exercise (2 marks)

Answer rating: 100% (QA)

The contract is assumed to have work uncertified cost therein as value of work certified is given and the percentage of work completed and certified i... View the full answer