A Cantilever Ltd was awarded a contract to build an office block in London and work commenced at the site on 1 May 2013.

During the period to 28 February 2014, the expenditure on the contract was as follows:

Materials issued from stores ..... 9,411 Materials purchased Direct expenses ..... 6,149 Wages ..... 18,493 Charge made by the company for administration expenses ..... 2,146 Plant and machinery purchased on 1 May 2013, for use at site ..... 12,180 On 28 February 2014, the materials at the site amounted to $£ 2,164$ and there were amounts outstanding for wages $£ 366$ and direct expenses $£ 49$.

Cantilever Ltd has received on account the sum of $£ 64,170$ which represents the amount of Certificate No. 1 issued by the architects in respect of work completed to 28 February 2014, after deducting $10 \%$ retention money.
The following relevant information is also available:

(a) the plant and machinery have an effective life of five years, with no residual value; and

(b) the company only takes credit for two-thirds of the profit on work certified.
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(a) prepare a contract account for the period to 28 February 2014; and

(b) show your calculation of the profit to be taken to profit and loss in respect of the work covered by Certificate No. 1.
(Institute of Chartered Accountants)