Question 1 B. Builder (Pty) Ltd. is a construction company whose year end is 31 December. Contract no. 100 was started on 1 May 2006 and completed on 25 February 1999. The following information relates to Contract no. 100 for the 2006 and 2007 financial years: Material Labour Overheads 31/12/2006 105 000 60 000 55 000 R220 000 31/12/2007 10 000 6 000 6 000 R22 000 R260 000 R234 000 R305 000 R305 000 R274 000 Tender price Value of work certified to date Cash received to date Retention money payable six months after date of completion R26 000 R30 500 At 31/12/2006 the costs to complete the contract were estimated at R28 000. Required (a) Draw up the contract account for both years based on the completed contract method. (b) Show the amount of profit that would be taken to the income statement at 31 December 2006 where the following methods are used: i. percentage of completion based on cost; and ii. percentage of completion based on revenue. (c) Show the current assets section of the balance sheet at 31 December 2006, where profit is determined as in 2.1. Question 2 The following are details of Contract no. 21A undertaken by M N Ltd. Date commenced: Date completed: Contract price: 1 July 2006 31 October 2007 R1 000 000 Direct expenditure 2006 Materials Wages Expenses 138 240 142 870 9440 R290 550 2007 R 246 990 302 980 13 240 R563 210 Plant purchased for cash at beginning of contract Payments for plant bought on an HP contract Penalty for failure to complete by 30 September 2006 Cash received in 2007 Cash received in 2006 R120 000 20 000 10 000 360 000 630 000