Question

Buildwell Ltd. commenced a contract on 1st Jan., 2016. The total contract was for
10,00,000 (estimated by the contractee) and was accepted by Buildwell Ltd. at 10%
less. It was decided to estimate the total profit and to take to the credit of P. & L. Alc
that proportion of estimated profit on cash basis which the work completed bore to
the total contract. Actual expenditure in 2016 and estimated expenditure in 2017 are
given below:
2016 (Actual)
2017 (Estimate)
Materials
1,50,000
2,60,000
Labour : Paid
1,00,000
1,20,000
Accrued
10,000
Plant Purchased
80,000
Expenses
40,000
71,000
Plant returned to Stores on cost
20,000
50,000
(31 Dec.)
(on 30/9/2017)
Materials at site
10,000
Work certified
4,00,000
Full
Work uncertified
15,000
Cash received
3,00,000
Full
The plant is subject to annual depreciation @ 20% of cost. The contract is likely to
be completed on 30th September, 2017. Prepare the Contract Account
VA
Net
Dreft
100 000
profit​

Answer 1

Explanation:

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