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Material sent to site 190000 Wages paid 120000 Wages outstanding 5500 Direct expenses 60000 Establishment charge 52000 Special plant installed at cost 200000 Cost of work not certified 25000 Value of special plant on 31-12-86 170000 Material at site on31-12-86 21000 Total contract price 1200000 Cash received 594000 Retention 10%of work certified Sale of scrap 200 General plant costing 120000was used for 3months depreciation on that this to be provided at 15%p.a. Create contract account.?
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Material sent to site 190000 Wages paid 120000 Wages outstanding 5500 ...
Contract Account
The contract account is a financial statement that records all the transactions related to a specific contract. It helps in tracking the progress of the contract, calculating the profit or loss, and determining the financial position of the contract at the end of the accounting period.
1. Opening Balance
- Material sent to site: 190,000
- Wages paid: 120,000
- Wages outstanding: 5,500
- Direct expenses: 60,000
- Establishment charge: 52,000
- Special plant installed at cost: 200,000
- Cost of work not certified: 25,000
- Value of special plant on 31-12-86: 170,000
- Material at site on 31-12-86: 21,000
The opening balance of the contract account is the total cost incurred until the beginning of the accounting period.
Opening balance = Material sent to site + Wages paid + Wages outstanding + Direct expenses + Establishment charge + Special plant installed at cost + Cost of work not certified + Value of special plant on 31-12-86 + Material at site on 31-12-86
Opening balance = 190,000 + 120,000 + 5,500 + 60,000 + 52,000 + 200,000 + 25,000 + 170,000 + 21,000
Opening balance = 843,500
2. Additional Transactions
- Total contract price: 1,200,000
- Cash received: 594,000
- Retention: 10% of work certified
- Sale of scrap: 200
- General plant costing 120,000 was used for 3 months, depreciation on that this to be provided at 15% p.a.
The additional transactions include the contract price, cash received, retention, sale of scrap, and depreciation on general plant.
3. Calculation of Work Certified
Work certified = Total contract price - Retention
Work certified = 1,200,000 - (1,200,000 * 10/100)
Work certified = 1,200,000 - 120,000
Work certified = 1,080,000
4. Calculation of Retention
Retention = Work certified * 10/100
Retention = 1,080,000 * 10/100
Retention = 108,000
5. Calculation of Depreciation
Depreciation = General plant costing * Depreciation rate * Time/12
Depreciation = 120,000 * 15/100 * 3/12
Depreciation = 4,500
6. Closing Balance
Closing balance = Opening balance + Work certified + Cash received - Retention - Depreciation + Sale of scrap
Closing balance = 843,500 + 1,080,000 + 594,000 - 108,000 - 4,500 + 200
Closing balance = 2,405,200
Conclusion
The contract account is a statement that records all the transactions related to a specific contract. It helps in determining the financial position of the contract and calculating the profit or loss. By including the opening balance, additional transactions, work
The contract account is a financial statement that records all the transactions related to a specific contract. It helps in tracking the progress of the contract, calculating the profit or loss, and determining the financial position of the contract at the end of the accounting period.
1. Opening Balance
- Material sent to site: 190,000
- Wages paid: 120,000
- Wages outstanding: 5,500
- Direct expenses: 60,000
- Establishment charge: 52,000
- Special plant installed at cost: 200,000
- Cost of work not certified: 25,000
- Value of special plant on 31-12-86: 170,000
- Material at site on 31-12-86: 21,000
The opening balance of the contract account is the total cost incurred until the beginning of the accounting period.
Opening balance = Material sent to site + Wages paid + Wages outstanding + Direct expenses + Establishment charge + Special plant installed at cost + Cost of work not certified + Value of special plant on 31-12-86 + Material at site on 31-12-86
Opening balance = 190,000 + 120,000 + 5,500 + 60,000 + 52,000 + 200,000 + 25,000 + 170,000 + 21,000
Opening balance = 843,500
2. Additional Transactions
- Total contract price: 1,200,000
- Cash received: 594,000
- Retention: 10% of work certified
- Sale of scrap: 200
- General plant costing 120,000 was used for 3 months, depreciation on that this to be provided at 15% p.a.
The additional transactions include the contract price, cash received, retention, sale of scrap, and depreciation on general plant.
3. Calculation of Work Certified
Work certified = Total contract price - Retention
Work certified = 1,200,000 - (1,200,000 * 10/100)
Work certified = 1,200,000 - 120,000
Work certified = 1,080,000
4. Calculation of Retention
Retention = Work certified * 10/100
Retention = 1,080,000 * 10/100
Retention = 108,000
5. Calculation of Depreciation
Depreciation = General plant costing * Depreciation rate * Time/12
Depreciation = 120,000 * 15/100 * 3/12
Depreciation = 4,500
6. Closing Balance
Closing balance = Opening balance + Work certified + Cash received - Retention - Depreciation + Sale of scrap
Closing balance = 843,500 + 1,080,000 + 594,000 - 108,000 - 4,500 + 200
Closing balance = 2,405,200
Conclusion
The contract account is a statement that records all the transactions related to a specific contract. It helps in determining the financial position of the contract and calculating the profit or loss. By including the opening balance, additional transactions, work
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Material sent to site 190000 Wages paid 120000 Wages outstanding 5500 Direct expenses 60000 Establishment charge 52000 Special plant installed at cost 200000 Cost of work not certified 25000 Value of special plant on 31-12-86 170000 Material at site on31-12-86 21000 Total contract price 1200000 Cash received 594000 Retention 10%of work certified Sale of scrap 200 General plant costing 120000was used for 3months depreciation on that this to be provided at 15%p.a. Create contract account.?
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Material sent to site 190000 Wages paid 120000 Wages outstanding 5500 Direct expenses 60000 Establishment charge 52000 Special plant installed at cost 200000 Cost of work not certified 25000 Value of special plant on 31-12-86 170000 Material at site on31-12-86 21000 Total contract price 1200000 Cash received 594000 Retention 10%of work certified Sale of scrap 200 General plant costing 120000was used for 3months depreciation on that this to be provided at 15%p.a. Create contract account.? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Material sent to site 190000 Wages paid 120000 Wages outstanding 5500 Direct expenses 60000 Establishment charge 52000 Special plant installed at cost 200000 Cost of work not certified 25000 Value of special plant on 31-12-86 170000 Material at site on31-12-86 21000 Total contract price 1200000 Cash received 594000 Retention 10%of work certified Sale of scrap 200 General plant costing 120000was used for 3months depreciation on that this to be provided at 15%p.a. Create contract account.? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Material sent to site 190000 Wages paid 120000 Wages outstanding 5500 Direct expenses 60000 Establishment charge 52000 Special plant installed at cost 200000 Cost of work not certified 25000 Value of special plant on 31-12-86 170000 Material at site on31-12-86 21000 Total contract price 1200000 Cash received 594000 Retention 10%of work certified Sale of scrap 200 General plant costing 120000was used for 3months depreciation on that this to be provided at 15%p.a. Create contract account.?.
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