Z Ltd is engaged upon a contract the price of which is £250,000. At 31 December 20X0 the expenditure on the contract is as follows:

The amount of work completed to date as certified by the architect after 20 per cent retention money was £100,000. Materials in stock at the site were valued at £970 and depreciation is to be charged at 5 per cent. Prepare the contract account showing the proportion of profit you would advise should be taken to the profit and loss account.

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Materials issued from store 42,000 Wages 39,820 Expenses directly chargeable to the contract 12,130 Materials purchased and delivered direct to the site 4,910 Plant in use on site valued at 6,840 Proportion of overhead charges 790