Page 235 - DCOM202_COST_ACCOUNTING_I

Unit 11: Contract Costing

` 2,00,000 have been received from the contractee, being 80% of the work certified. Calculate Notes
profit to be credited to profit and loss account, Uncertified work-in-progress being ` 20,000. Total
value of the contract is ` 4,00,000.
Solution:

Contract Account

Particulars ` Particulars `
To Materials 90,000 By Work-in-progress :
To Wages 60,000 Work certified 2,50,000
(2,00,000 × 100/80)
To Direct charges 60,000 Work uncertified 20,000
To Profit c/d 60,000
2,70,000 2,70,000
To Profit and loss account 32,000 (1) By Profit b/d 60,000
To Work-in-progress account 28,000
60,000 60,000

2 Cashreceived
Working note: (1) = × Totalprofit ×
3 Work certified
2 200 000
,
,
= , × 60 000 ×
,
,
3 250 000
= ` 32,000

Task The following expenses relate to a contract:

Materials issued to contract ` 85,349
Labour engaged ` 74,375
plant at cost ` 15,000
Direct expenses ` 3,169

Establishment charges ` 4,126
Materials returned to stores ` 549
Work certified ` 1,95,000
Cost of work uncertified ` 4,500
Materials in hand on 31 December, 2007 ` 1,883
st
Wages accrued due at 31 December, 2007 ` 2,400
st
Direct expenses accrued due at 31 December, 2007 ` 240
st
st
Value of plant at 31 December, 2007 ` 11,000
The contract price has been agreed at ` 2,50,000. Cash received from the contractee was
` 1,80,000. The accounting year closes on 31 December, 2007.
st
prepare Contract Account and Contractee’s Account for the year 2007.

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