Can anyone please tell me the entries in the books of the contractee in contract accounts
I know that AS-7 is not applicable in this case (but still i want to know the journal entries)
Suppose i hired a contractor to make a building for a contract price of 5 lacs
Payment is to be made as follows
Year 0 (Down Payment) - 100000
Year 1-4 - 100000 each
It will be of great help
In normal case cash paid is percentage of work cetified
As you pay cash will debited to assets a/c ie.
fixed assest a/c..................................Dr.
To cash a/c
[note:-cash decreasing and assests increasing so effect will NIL in balance sheet and it will tally]
it should shaw in balance sheet as fixed assest wip and add to that type of asses
in your eg:
there is down payment i.e. before constructing assest
. ' . I hope so it should trated as payment in advance and debited to contractor's a/c and afterword it should adjusted from contractor's a/c.
now I thing so you can give ans of your Q but my ans is as follow
yr1 contractor's a/c...................Dr 100000
To cash 100000
[down payment]
yr1 Bulding a/c..........................Dr. 200000
To cash a/c 100000
To contractor's 100000
[adjust contactor's a/c as will paid cash]
yr2 Bulding a/c .........................Dr. 100000
To cash a/c 100000
yr3 Bulding a/c .........................Dr. 100000
To cash a/c 100000
yr4 Bulding a/c .........................Dr. 100000
To cash a/c 100000
CAclubindia
