contract costing doubt..urgent

 The reason material at site of 2007 is not considered because material at site of 2007 (which is the closing balance of 2007) becomes the openning balance of 2008 and  material issued for the year 2008 includes the opening balance. At the right side of the account we only keep what is left i.e material at site but material at site of 2007 is now included in 2008 and it is issued therfore when you prepare estimated account you only considere material at site of 2008. That is why Rs.4000 which is the material at site of 2007 is not deducted because had it been deducted then Rs.4000 would become closing balance (or material at site) but Rs.4000 is already issued as it is included in issue value of 2008 and it is no more a closing balance.

Here you are calculating estimated profit and preparing contract account from the beginning till the end of the contract.  

CLOSING MATERIAL OF 2007 WILL BECOME OPENING MATERIAL OF 2008 HENCE EFFECT WILL BE NIL FOR CALCULATING ESTIMATED PROFIT

bt in question its nt mentioned that cls stock of mat at site of o7 is included in mat issed for 08

mat 08 ka to naya issue kiya hoga na..hw can we say that 07 mat at site is inlcuded in 08 issue

1. materail usd for 2007= materail issued - materail sale -materail at site                                                   = 20000 -5000 - 4000 = 11000
2. material used for 2008= op material at site + material issued - cl. material at site                                          = 4000 + nil - nil
3. total material used = 2007 + 2008                                                                                                                                         = 11000+4000= 15000