Pioneer Construction Company Ltd. obtained a contract for the erection of a multi-storey building. Building operations started in July 2001. The contract price was Rs. 9,00,000. On 30th June 2002, the end of the financial year, the cash received on account was Rs. 3,60,000, being 80% of the amount on the surveyors certificate. The following additional information is given:

You are required to prepare the contract account and statement showing the profit on the contract to 30th June 2002, indicating what proportion of the profit the company would be justified in taking to the credit of the profit and loss account, and to show what entries in respect of the contract would appear in the balance sheet. 

Transcribed Image Text:

Materials issued to contract Materials on hand at site as on 30th June 2002 Wages Plant purchased specially for contract and to be depreciated at 10% per annum Direct expenses incurred General overhead allocated to contract Work finished but not yet certified: cost Rs. 1,80,000 7,500 2,46,600 30,000 12,900 7,600 15,000