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This query is : Resolved

MD.AKHTARUZZAMAN ANSARI (Querist)
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21 June 2010 if we contrac with a party to supply material for constrction at site for Rs.5000000.
Journal entry of bill
Party A/c Dr. 500,000
To contrac receipt A/c 500,000
During construction Party itself introduced materials costing Rs.250,000.
Sir,
Now what will be journal entry in our book for Rs. 250,000.
In my opinion it shoud be
Conract Receipt A/c Dr/ 250,000
To Party A/c 250,000
Is This Right?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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21 June 2010 You need to tell the Contract term whether material issued by the contractee as free of cost or the cost recovered from Your bill?

shakuntala chhangani

shakuntala chhangani (Expert)
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23 June 2010 The contract can be of two types i.e cost plus contract and fixed price contract. under cost plus contract, the contractor receives a fixed % of profit over and above the cost incurred whereas in fixed price contract, the contractor receives a fixed amount from contractee irrespective of expenses incurred by him.
In ur case, in absence of details, no enrty will be passed in the books of contractor for the expenses incurred by the contractee (assumed to be as per terms of contract)as only the possession but not the ownership is passed on to the contractor

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