Stannard and Sykes Ltd are contractors for the construction of a pier for the Seafront Development Corporation. The value of the contract is £300,000, and payment is by engineer’s certificate subject to a retention of 10 per cent of the amount certified; this is to be held by the Seafront Development Corporation for six months after the completion of the contract.

The following information is extracted from the records of Stannard and Sykes Ltd.

Required:
Prepare the Pier Contract Account to 30 November 2008, and suggest a method by which profit could be prudently estimated.

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Wages on site Materials delivered to site by supplier Materials delivered to site from store Hire of plant 41,260 58,966 10,180 21,030 Expenses charged to contract 3,065 Overheads charged to contract 8,330 Materials on site at 30 November 2008 11,660 Work certified 150,000 Payment received 135,000 Work in progress at cost (not the subject of a certificate to date) 12,613 Wages accrued to 30 November 2008 2,826