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Contract Accounting for Bridge Project

The document outlines financial details related to the construction of a bridge by the Indian Construction Co. Ltd., including contract value, expenses, and account balances as of June 30, 2006. It provides a breakdown of costs such as labor, materials, and overheads, and includes instructions to prepare a Contract Account, Contractee's Account, and a Balance Sheet. Additionally, it mentions two contracts undertaken by Modern Contractors, detailing their respective financial figures.

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25 views3 pages

Contract Accounting for Bridge Project

The document outlines financial details related to the construction of a bridge by the Indian Construction Co. Ltd., including contract value, expenses, and account balances as of June 30, 2006. It provides a breakdown of costs such as labor, materials, and overheads, and includes instructions to prepare a Contract Account, Contractee's Account, and a Balance Sheet. Additionally, it mentions two contracts undertaken by Modern Contractors, detailing their respective financial figures.

Uploaded by

charleschirwa477
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Problem 2.

200 By Plant at site 11,300 18,150

1,56,400

11,000 By Notional Profit bid

7,150

18,150

211

8,200

1,56,400

18,150

18,150

The Indian Construction Co. Ltd. has undertaken the construction of a bridge over the River Yamuna for
a Corporation. The value of the contract is Rs. 15,00,000 subject to retention of 20% until one year after
certified completion of the contract, and final approval of the Corporation's engineer. The following are
the details as shown in the books on 30th June, 2006.

Labour on site Materials direct to site Materials from stores Hire and use of plant Direct expenses
General overhead allocated to the contract

Rs. 4,05,000 4,20,000 81,200 12,100 23,000

37,100

Materials on hand on June 30th, 2006 Wages accrued on June 30th, 2006 Direct expenses accrued on
June 30th 2006 Works not yet certified at cost Amount certified by the Corporation's engineer Cash
received on account

Rs. 6,300 7,800 1,600 16,500

11,00,000 8,80,000

Prepare (a) Contract Account, (b) Contractee's Account, and (c) show how it would appear in the
Balance Sheet. (B. Com., De/IIi)

Solution:

Contl1llct Account for the year ending 30th June, 2006


Particulars

To Materials direct to site To Materials from storc To Labour on site To Hire and use of plant To General
overhead To Wages accrued To Direct expenses To Direct expenses accrued To' NotIOnal profit cld

To P & LAic

1,35,000 x ~ x 8,80,0(0) 3 1,10,000

:To Reserve

Rs.

4,20,000 81,200 4,05,000 12,100 37,100 7,800 23,000 1,600 1,35,000 11,202,800

Particulars

By Materials on hand By Work-in-progress : Certified Uncertified

72,000 By Notional Profit cld

63,000

1,35,000

Rs.

6,300

11,00;oeo 16,500

11,202,800 1,35,000

1,35,000

2.12 Methods and Techniques of Cost ACCOUlltillg

Contractee's Account

Rs. To Contract Alc 8,80,000 By Cash

Balance Sheet as on 30th June, 2006

Liabilities Rs. Assets

Wages accrued 7,80,000 Work certified 11,00,000 Direct expenses accrued 1,600 Work uncertified
16,500 11,16,500 Less: Cash received 8,80,000 2,36,5000 Less: Reserve 63,000
Problem 2.8 Modern Contractors have undertaken the following two contracts on 1st January, 2005 :

COl/tract A COlltract B Rs. Rs Materials sent to sites 85.349 73,267 Labour engaged on sites 74,375
68,523 Plants installed at sites at cost 15,000 12,500 Direct expenditure 3,167 2,859 Establishment
charges 4,126 3,852 Materials returned to store 549 632 Work certified 1,95,000 1,45,000 Cost of work
not certified 4,500 3,000 Materials in hand 31 st Dec., 2005 1,883 1,736 Wages accrued 31 st Dec., 2005
2,400 2, I 00 Direct expenditure accrued 31 st Dec., 2005 240 180 Value on plant 31 st Dec., 2005 11,000
9,500

Rs. 8,80,000 8,80,000

Rs

1,73,500

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