Under contract costing, system of ‘progress payment’ is used”. In the light of this statement give the meaning and its relevance. Also prepare a contract account from the following information, and show how much part of profit will be transferred to costing P&L account. Contract price Rs.18,00,000 Labour cost on site Rs.420,000 Materials direct to site Rs.325,000 Materials from the stores Rs.78,000 Hire and Use of Plant Rs.10,200 Direct Expenses Rs.13,300 General Overhead allocated Rs.37,000 Material at hand on 30th June, 2020 Rs.6,100 Wages Accrued on 30th June 2020 Rs.6,800 Direct expenses accrued on 30th June, 2020 Rs.1,400 Work not yet certified at cost Rs.18,500 Work Certified by Engineer Rs.10,00,000 Cash Received 80%
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Answer:
Under contract costing, system of ‘progress payment’ is used". In the light of this statement give the meaning and its relevance. Also prepare a contract account from the following information, and show how much part of profit will be transferred to costing P&L account.
Contract price Rs.18,00,000 Labour cost on site Rs.420,000
Materials direct to site Rs.325,000
Materials from the stores Rs.78,000
Hire and Use of Plant Rs.10,200
Direct Expenses Rs.13,300
General Overhead allocated Rs.37,000
Material at hand on 30th June, 2020 Rs.6,100
Wages Accrued on 30th June 2020 Rs.6,800
Direct expenses accrued on 30th June, 2020 Rs.1,400
Work not yet certified at cost Rs.18,500
Work Certified by Engineer Rs.10,00,000
Cash Received 80%
5. Portronics is an electrical company manufacturing switches. The manager of the company