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Rs. (2) Calculation of Profit : Expenditure till 31. 12. 2003 Less : Materials and Plant Less : Cost of uncertified work 2,08,840 31,380 1,77,460 44.365 1,33,095 2,00,000 66,905 Less : Work Certified Profit up to date p38 66,905 2 80 X x = Rs. 35,683.20 1 3 100 Cost of Uncertified Work : As the 2/3rd of the work was completed for a cost of Rs. 1,77,460 therefore the estimate for the total cost would be Rs. 2,66,190. Architect's certificate represents of the contract price and therefore cover expenditure of of Rs. 2,66,190, i.e., Rs. 1,33,095. Hence, the cost of work uncertified Rs. 1,77,460 - Rs. 1,33,095 = Rs. 44,365. Illustration: 5 William Construction Company Ltd. obtained a contract for the erection of a multi-story building. Building operations started in July 2002. The contract price was Rs. 9,00,000. On 30th June 2003, the end of the financial year, the cash received on account was Rs. 3,60,000 being 80% of the amount on the surveyor's certificate. The following additional information is given below: Rs. Materials issued to contract 1,80,000 Materials on hand 30. 6. 2003 7.500 2,46,600 Plant purchased specially for contract and to be depreciated at 10% per annum 30,000 Direct expenses incurred 12,900 General overhead allocated to contract 7,600 Work finished but not yet certified : cost 15,000 You are required to prepare the contract account and statement showing the profit on the contract to 30th June 2003, 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 contact would appear in the balance sheet. Wages }