QUESTION 1 CCR Construction Sdn Bhd has been engaged to construct a resort at Pulau Sipadan. The contract has commenced its operation on 1 February 2020 and it is expected to be completed on 31 August 2021. The following details of the contract have been extracted from the company's book of account for the period ended 31 October 2020: Items Contract value Materials issued to site Materials returned to store Plant and machinery sent to site at cost Materials at site 31 October 2020 Wages paid Subcontractor charges paid Direct expenses paid Value RM 2,783,000 847,000 96,800 1,391,000 104,060 417,450 60,500 33,880 The company's accounting period ends on 31 October every year. Depreciation on plant and machinery is charged on monthly basis at a rate of 20% per annum on cost. Overheads are absorbed at 25% of total material used during the period. As at 31 October 2020, total subcontractor charges and total wages incurred for the period is RM54,450 and RM435,600 respectively. Value of the work certified by the architect on 31 October 2020 is RM1,996,500. Cash received from client is subjected to 4% retention money. Due to some unforeseen circumstances, the company needs to incur additional costs to complete this contract and it is estimated to be RM800,000. The company also estimates for warranty and rectification costs of RM29,368 to be incurred in the future. Profit for the contract is to be recognised based on the input (cost) method. a. Required: Prepare the following for the period ended 31 October 2020: i. Construction in Process Account il. Contractee Account b. Define the following terms: (12 marks) i. II. Value of work certified Architect Certificate (3 marks) (Total: 15 marks) QUESTION 1 CCR Construction Sdn Bhd has been engaged to construct a resort at Pulau Sipadan. The contract has commenced its operation on 1 February 2020 and it is expected to be completed on 31 August 2021. The following details of the contract have been extracted from the company's book of account for the period ended 31 October 2020: Items Contract value Materials issued to site Materials returned to store Plant and machinery sent to site at cost Materials at site 31 October 2020 Wages paid Subcontractor charges paid Direct expenses paid Value RM 2,783,000 847,000 96,800 1,391,000 104,060 417,450 60,500 33,880 The company's accounting period ends on 31 October every year. Depreciation on plant and machinery is charged on monthly basis at a rate of 20% per annum on cost. Overheads are absorbed at 25% of total material used during the period. As at 31 October 2020, total subcontractor charges and total wages incurred for the period is RM54,450 and RM435,600 respectively. Value of the work certified by the architect on 31 October 2020 is RM1,996,500. Cash received from client is subjected to 4% retention money. Due to some unforeseen circumstances, the company needs to incur additional costs to complete this contract and it is estimated to be RM800,000. The company also estimates for warranty and rectification costs of RM29,368 to be incurred in the future. Profit for the contract is to be recognised based on the input (cost) method. a. Required: Prepare the following for the period ended 31 October 2020: i. Construction in Process Account il. Contractee Account b. Define the following terms: (12 marks) i. II. Value of work certified Architect Certificate (3 marks) (Total: 15 marks)
