During its financial year ended 30 June 20X7 Beavers, an engineering company, has worked on several contracts. Information relating to one of them is given below:

Contract X201 Date commenced 1 July 20X6 Original estimate of completion date 30 September 20X7 Contract price £240,000 Proportion of work cer tified as satisfactorily completed (and invoiced) up to 30 June 20X7 £180,000 Progress payments from Dam Ltd £150,000 Costs up to 30 June 20X7 Wages £91,000 Materials sent to site £36,000 Other contract costs £18,000 Proportion of Head Office costs £6,000 Plant and equipment transferred to the site

(at book value on 1 July 20X6) £9,000 The plant and equipment is expected to have a book value of about £1,000 when the contract is completed.

Inventor y of materials at site 30 June 20X7 £3,000 Expected additional costs to complete the contract:

Wages £10,000 Materials (including stock at 30 June 20X7) £12,000 Other (including Head Office costs) £8,000 At 30 June 20X7 it is estimated that work to a cost value of £19,000 has been completed, but not included in the cer tifications.

If the contract is completed one month earlier than originally scheduled, an extra £10,000 will be paid to the contractors. At the end of June 20X7 there seemed to be a ‘good chance’ that this would happen.

Required:

(a) Show the account for the contract in the books of Beavers up to 30 June 20X7 (including any transfer to the income statement which you think is appropriate).

(b) Show the balance sheet entries.

(c) Calculate the profit (or loss) to be recognised in the 20X6–X7 accounts.