Perfect House Contractors had 3 contracts in progress at 31.12. 2019

Contract Number PH12 PH13 PH14

$ $ $

Contract price 638,789 3,354,772 467,615

Costs to date 547,000 756,200 245,450

Estimated costs to complete 28,789 2,681,072 132,165

Payments received on account 638,789 485,600 232,500

Value of work certified 638,789 2,548,000 255,000

Cost of work certified 122,600 1,645,200 195,000

Required

a) Access whether any interim profits should be taken on the contracts and calculate them (10 marks)

b) Calculate the appropriate turnover and cost of sales value and prepare the financial statements for all the contracts (8 marks)

i don't understand which AS you applied but just follow below example

QUESTION 13 Perfect House Contractors had 3 contracts in progress at 31.12.2019 Contract Number PH12 PH13 PH14 $ $ $ Contract price 638,789 3,354,772 467,615 Costs to date 547,000 756,200 245,450 Estimated costs to complete 28,789 2,681,072 132,165 Payments received on account 638,789 485,600 232,500 Value of work certified 638,789 2,548,000 255,000 Cost of work certified 122,600 1,645,200 195,000 Required a) Access whether any interim profits should be taken on the contracts and calculate them (10 marks) b) Calculate the appropriate turnover and cost of sales value and prepare the financial statements for all the contracts (8 marks) o X EXAMPLE 1 AP11 At the end of the year XYZ developments have 3 contracts in progress and their details are as follows. Approximate degree of completion = 144000 144000+96000 100% = 60% AP12 AP10 AP11 AP12 154000 Approximate degree of completion = * 100% = 96% 154000+7000 Contract price 150,000 275,000 185,000 Costs to date Estimated profit or loss = contract price - total costs 35,000 144,000 154,000 Estimated costs to complete 88,000 96,000 AP10 = 150,000 - 123,000 = 27,000 7,000 Value of work certified AP11 = 275,000 - 240,000 = 35,000 40,000 165,000 172,000 AP12 = 185,000 - 161,000 = 24,000 Progress payments received 34,000 140,250 146,200 Cost of work certified 28,000 CALCULATING INTERIM PROFITS 138,000 150,000 Required 26 notional profit* cash received from progress payments Profit taken = value of work certified a) What interim profits if any should be taken on the three contracts? Where notional profit = value of work certified - cost of work certified b) Calculate the appropriate turnover and cost of sales value and prepare your financial statement. SOLUTION **(40,000-28,000) * 34,000 AP10 = = 3,400 40,000 Approximate degree of completion = costs to date * 100% total costs total costs = costs to date + estimated costs to complete + other costs AP10 * notional profit * cash received from progress payments Profit taken = value of work certified 35000 Approximate degree of completion = 35000+88000 * 100% = 28% o X CALCULATING COST OF SALES **(165,000-138,000) * 140,250 AP11 = = 15,300 165,000 = * cost of work certified * progress payments value of work certified Profit taken progress payments to date * estimated total profit on completion contract price AP10= * * 28,000 - 20.000 = 7,933 = 1 cost of work certified progress payments value of work certified 146,200 AP12 = * 24,000 = 18,966 185,000 AP11 = * 138,000 * 140,250 165,000 = 78,200 CALCULATING TURNOVER - progress payments * estimated total costs contract price * value or work certified * progress payments value of work cerfified AP10 34,000 *** 40,000 * 40,000 = 11,333 146.200 AP12 = * 161,000 = 127,234 185,000 Ap10 AP11 AP12 Turnover 11,333 93,500 146,200 2 3 value or work certified * progress payments value of work cerfified Less cost of sales 7,933 78,200 127,234 Net profit 3,400 15,300 18,966 AP11 165,000 140,250 93,500 165,000 End of document - progress payments * contract price contract price 146.200 AP12 = * 185,000 = 146,200 185,000