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Unit 11: Contract Costing

sold for ` 19,000. plant at the end of the year was valued by charging depreciation @20% per Notes
annum on 31 March, 2009.
st
Solution:

Contract Account
Particulars ` Particulars `
To plant account 2,00,000 By Vikas contract account
plant transferred
Cost 16,000
Less : Dep. @20% for 6 months 1,600 14,400
By Profit & loss account (Plant stolen) 6,000
By Fire insurance company (plant destroyed by 5,000
fire)
By Sale of plant 19,000
By Profit and loss account (Loss on plant sold)
Cost 20,000
Less : Sold 19,000 1,000
By plant at site
Cost 1,53,000
(2,00,000– 47,000)
Less : Dep. @20% for 10 months 25,500 1,27,500

Example: The contract price of a contract undertaken by Kartik Limited on 1st July, 2008
was ` 3,00,000. Following expenses were incurred on the contract:
Materials consumed ` 72,500
Materials in hand on 31st March, 2009 ` 30,000
Direct wages ` 40,000
Direct expenses ` 42,000
plant purchased ` 50,000
The contract was completed on 31st March, 2009 and the contract price was duly received. provide
depreciation on plant @10% per year and charge indirect expenses @20% on direct wages. prepare
Contract Account and Contractee’s Account in the books of Kartik Limited.
Solution:
Contract Account in the Books of Kartik Limited

date Particulars ` date Particulars `
st
st
2008, 1 To plant purchased 50,000 2009, 31 By Material in hand 30,000
July To Materials issued : March By plant in hand :
Materials consumed 72,500 Cost 50,000
Add : Material in hand 30,000 1,02,500 Less : Dep. 3,750 (1) 46,250
By Contractee’s account 3,00,000
To Direct wages 40,000
To Direct expenses 42,000
To Indirect expenses (20% of 8,000
direct wages)
2009, 31 To Profit and loss account 1,33,750
st
March
3,76,250 3,76,250

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