A contractor commenced a building contract on 1 October 2008. The contract price is Rs. 8,80,000. The following data pertaining to the contract for the year 2008–2009 have been compiled from his books and is as under
|
1 April 2009 |
WIP not certified |
1,10,000 |
|
Materials at site |
4,000 |
|
|
2009–2010 |
Expenses incurred: |
|
|
Materials issued |
2,24,000 |
|
|
Wages paid |
2,16,000 |
|
|
Hire of plant |
40,000 |
|
|
Other expenses |
68,000 |
|
|
31 March 2010: |
Materials at site |
8,000 |
|
WIP (not certified) |
16,000 |
|
|
Certified |
8,10,000 |
The cash received represents 80%of the work certified. It has been estimated that further costs to complete the contract will be Rs. 46,000 including the materials at site on 31 March 2010.
Required:
Determine the profit on the contract for the year 2009–2010 on a prudent basis, which has to be credited to P&L A/c.