Question One:

M/s Bhagwandas Associates undertook a contract for Sh.1,500,000 on an arrangement that 80 percent of the work done, as certified by the architect of the contractee, should be paid for immediately and that the remaining 20 percent be retained until the contract was completed.

In Year 1, the amount expended were; materials Sh.180,000, wages Sh.170,000, carriage Sh.6,000, cartage Sh.1,000, sundry expenses Sh.3,000. The work was certified for Sh.375,000 and 80% of this was paid as agreed.

In Year 2, the amounts expended were; materials Sh.220,000, wages Sh.230,000, carriage Sh.23,000, cartage Sh.2,000, sundry expenses Sh.4,000. Three-fifths of the contract was certified as done by March 31, and 80% of this was received accordingly. The value of uncertified stock and work-in-progress uncertified was ascertained as Sh.20,000.

In Year 3, the amounts expended were; materials Sh.126,000, wages Sh.170,000, cartage Sh.6,000, sundry expenses Sh.3,000 and on September 30 the whole contract was completed and the balance due to the contractor was paid on completion of the contract.

Required:

1. Contact account for each year in the books of the contractor (15 marks)
2. Contractee account for each year in the books of the contractor (5 marks)