step by step explanation

QUESTION 3 On 3 January 20X8, B Construction Limited started work on the construction of an office block for a contracted price of K750,000 with completion promised by 31st March 20X9. Budgeted cost of the contract was K600,000. The construction company's financial year end was 31 October 20X8 and on that date the accounts appropriate to the contract contained the following balances: K'ooo Materials issued to site 161 Materials returned from site 14 Wages paid 68 Own plant in use on site, at cost 96 Hire of plant and scaffolding 72 Supervisory staff: direct 11 Indirect 12 Head office charges 63 Value of work certified to 31 October 20X8 400 Cost of work complete but not yet certified 40 Cash received related to work certified 330 Depreciation on own plant to be provided at the rate of 12% per cent per annum on cost. K2,000 is owing for wages. Estimated value of materials on site is K24,000. No difficulties are envisaged during the remaining time to complete the contract. Required: (a) Prepare the contract account for the period ended 31 October 20X8, and show the amount to be included in the construction company's profit and loss account for that period (15 Marks) (b) Show extracts from the construction company's balance sheet at 31 October 20X8, so far as the information provided will allow. (10 Marks)