Page 230 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes Credit to Profit and Loss Account = Estimated profit on completed contract
Work certified Cash received
×
Contract price Work certified
Estimated profit on completed contract basis = Contract Price – (Total expenditure to date +
Estimated further expenditure to completed contract)

= 32,50,000 – (22,50,000 + 2,50,000) = ` 7,50,000
2750000 2125000
Credit to Profit and Loss Account = 750000× × = ` 7,50,000.
3250000 2750000
Example: Vikas undertook a contract for the construction of a building. Materials
purchased ` 2,00,000. Materials supplied from stores ` 30,000. Materials returned to stores ` 4,000.
Material costing ` 5,000 were stolen and materials worth ` 6,000 destroyed by fire. Materials
costing ` 3,000 were sold for ` 2,600. Materials in-hand ` 25,000. Materials worth ` 50,000 were
received from other building contract which was completed. Materials of ` 2,400 transferred to
other contracts. Show the above particulars in Contract Account.
Solution:

Contract Account

Particulars ` Particulars `
To Material purchased 2,00,000 By Materials returned to stores 4,000
To Materials supplied from stores 30,000 By Materials transferred to other 2,400
contracts
To Materials received from other 50,000 By Material sold 2,600
contract By Profit & loss account:
Loss on material sold 400
Material stolen 5,000
Loss by fire 6,000 11,400
By Materials in hand 25,000

Example: plant costing ` 70,000 issued to contract on 1 April, 2008. plant worth ` 2,000
st
was returned to store, plant costing ` 3,000 was sold for ` 3,500. plant worth ` 500 was stolen and
worth ` 300 destroyed by fire. Plant in hand at the end of the year was ` 20,000.
Solution:

date Particulars ` date Particulars `
2008, 1 To plant issued to site 70,000 2008, 1 st By plant returned to store 2,000
st
April April
2009, 31 To Profit & loss account 500 2009, 31 By plant sold 3,500
st
st
March (3,500–3,000 = 500) March By Profit & loss account :
plant stolen 500
plant destroyed 300 800
By plant in hand c/d 20,000

Example: Show how would you deal with plant in Udai Contract Account with the
following information:
plant issued to contract on 1 June, 2008 costing ` 2,00,000, plant costing ` 16,000 was transferred
st
to Vikas Contract on 30.11.2008, Plant costing ` 6,000 was stolen and another costing ` 5,000 was
destroyed by fire. The plant was insured against fire to the full value. Plant costing ` 20,000 was

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