Model: Profit on Contract
Vijay & Co. obtained a contract for the construction of a residential building of Rs. 9,00,000.Building operations are started on 1 April 2009 and at the end of the financial year, that is, 31 March 2010, they received from the party a sum of Rs. 3,60,000 being 80% of the amount of the surveyor’s certificate. The following additional information is available:
|
Stores issued to contract |
1,80,000 |
|
Stores on hand as on 31 March 2010 |
15,000 |
|
Wages paid |
2,46,000 |
|
Plant purchased for the contract |
30,000 |
|
Direct expenses |
12,900 |
|
Plant to be depreciated @ 10% |
You are required to prepare an account showing profit on contract up to 31 March 2010. Also discuss whether Vijay & Co. would be justified in taking the full amount of this profit to the credit of their P&L A/c.