Need help on a cost accounting question

The following figures are disclosed by the books of a contractor for the year ending 31st December 2013:
Work in progress on 31st Dec., 2012 - 170,000 Less: Advances received from contractee on 31st Dec. , 2012 - 110,000

Transaction during the year were as follows-

Materials supplied to contract directly by merchants Rs. 12,000;
Materials issued from stores Rs. 21,000; Wages Rs. 17,000;
Working expenses Rs. 3,000;
Administrative expenses (of which Rs.500 are chargeable to general profit & Loss Account) Rs. 2500;
Plant issued Rs. 5,000;
Material returned from contracts directly to merchants Rs. 900;
Materials returned to stores Rs. 1,100;
Contracts finished Rs. 45,000;
Work certified Rs. 30,000;
Profit taken upon contracts Rs. 23,000;
Advances from contractee Rs. 80,000.

Prepare contract ledger account and the Contractee’s A/c and show how the Work-in-progress would appear in the Balance Sheet as on 31st Dec., 2013?

 

Replies (1)

Take opening raw material,labour, in the debit side and debit all expenses to contract account and credit work in progress at close, raw material at close, labour cost at close in the credit side of the contract account. Difference amount is called profit or loss in that contract.

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