Model: Contractee Account Retention of % for a specified period

XL & Co. Ltd has undertaken the construction of a bridge over the River Cauvery for Trichy Municipal Corporation. The value of the contract is Rs. 50,00,000 subject to a retention of 20% until one year after the certified completion of the contract and the final approval of the Corporation engineer. The following are the details as shown in the books on 31 December 2009:

Labour on site

16,20,000

Materials direct to site Less returns

16,80,000

Materials from store

3,24,800

Hire and use of plant—plant upkeep Account

48,400

Direct expenses

92,000

General overhead allocated to the contract

1,48,400

Materials in hand on 30 June 2009

25,200

Wages accrued on 30 June 2009

31,200

Direct expenses accrued on 30 June 2009

6,400

Work not yet certified at cost

66,000

Amount certified by the Corporation engineer

44,00,000

Cash received on account

35,20,000

You are required to prepare

  1. Contract account
  2. Contractee’s account and
  3. Show how the relevant items would appear in the Balance Sheet