help meeeeeeeee

An expenditure of Rs. 4,85,000 has been incurred on a contract till 31st March, 2006 and

value of the work certified is Rs. 5,50,000. The cost of work performed but not yet

certified is Rs. 15,000. The profit of Rs. 30,000 had been taken to the credit of Profit &

Loss Account till 31st March, 2005. The estimated future expenses are Rs. 1,00,000. The

estimated total expenses is to include a provision of 2-1/2 per cent for contingencies. The

contract price is Rs. 7,00,000 and the payment received till date is Rs. 5,00,000.

Calculate the profit to be taken to the credit of Profit and Loss Account for the year ended

on 31st March, 2006.

plz tell me the solution of this .

Replies (2)

Hey Kanika,

 

According to me the solution is:

 

First calculate the estimated profit, which is:

 

Cost of Work certified: 85000

Cost of work uncertified: 15000

Estimated further expenses: 100000

Total: 600000

Prov for contin (2.5% of total exp) 15000

Total Expenses: 615000

(-) Contract Price : 700000

Estimated Profit: 85000

 

Profit to be taken to P&L = Esti Profit * (work certified / estimated price) * (cash recd / work certified)

Profit to be taken to P&L = 85000 * (550000 / 700000) * (500000 / 550000)

Rs. 60714.29 (approx).

 

Please check and revert back whether its correct or not??

sorry this answer is not correct. the ans. is Rs. 48571.

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