Contract costing help....!!!! urgent....

That has rightly been done. Any loss is transferred to P&L account. If 100 materials are issued to site, 80 gets sold and 20 lost, then the loss will get debited to contract acc.

Opening WIP gets credited to contract account.

thanks for replying Sumit

But y credit??? I mean contract account is nothing but a P&L account and all the losses are booked on the debit side of the P&L so can you pls tell me the reason for y this shud be taken to the credit side

You are right. You could do that if you are willing to bring P&L account in play numerous times rather than just once. Practically speaking, it is logical to balance the figures to get a profit/loss figure and then transferring that ONE figure to the P&L account. Hope this helped.

@ Shobhit Jain-the entry for the loss will be as follows -

(i) Contract a/c              Dr.

              To material loss

(ii) Material loss a/c      Dr.

               To P&L a/c

NET RESULT:

Contract a/c         Dr.

            To P&L a/c

This is due to the fact that if the material is lost it has to be charged to the P&L a/c and not to be charged in the contract a/c