Model: Balance Sheet Entries
A company undertook a contract for construction of large housing apartments. The construction work commenced on 1 January 2009 and the following data are available for the year that ended on 31 December 2009.
|
Rs.(in ‘000) |
|
|
Contract price |
70,000 |
|
Work certified |
40,000 |
|
Progress payments received |
30,000 |
|
Materials issued to site |
15,000 |
|
Planning and estimate costs |
2,000 |
|
Direct wages paid |
8,000 |
|
Materials returned from site |
500 |
|
Plant hire charges |
3,500 |
|
Wage-related costs |
1,000 |
|
Site-office costs |
1,356 |
|
Head-office expenses apportioned |
750 |
|
Direct expenses |
1,804 |
|
Work uncertified |
298 |
The contractors own a plant which originally cost Rs. 40 lakhs and it has been continuously in use in this contract throughout the year. The residual value of the plant after 5 years of life is expected to be Rs.10 lakhs. Straight Line Method of depreciation is in use.
As on 31 December 2009, the direct wage that is due and payable amounted to Rs.5,40,000 and the materials at site were estimated at Rs.4,00,000.
- Prepare the contract account for the year ended 31 December 2009
- Show the calculation of profit to be taken to P&L A/c of the year
- Show the relevant balance-sheet entries