Question 2 On the 1 March 20x1 Interface Unit started working on a contract with a contract price of R125 000.00. The following details regarding this contract were extracted from the records on 31 December 20x1 Details Material purchased for the contract R31 862.50 Wages paid R35 480.00 Other direct contract expenses R2 657.50 Plant purchased for the contract on 1 R28 437.50 March 20x1 Progress payments received from the R91 350.00 client The following additional information was made available: • The amount received from the client represents the value of all work certified less 15% retention money. • When the financial statement for 20x1 were prepared it was estimated that the contract would be completed by 30 January 20x2 and that the plant would have a market value of R8 075.00 on that date. It was estimated that further expenditure on the contract would amount to R18 200.00 • The company has a policy to take, in the financial statements, as part of the estimated total profit on each incomplete contract adjusted for the proportion between the progress payments made to date and the total contract price
Question 2 On the 1 March 20x1 Interface Unit started working on a contract with a contract price of R125 000.00. The following details regarding this contract were extracted from the records on 31 December 20x1 Details Material purchased for the contract R31 862.50 Wages paid R35 480.00 Other direct contract expenses R2 657.50 Plant purchased for the contract on 1 R28 437.50 March 20x1 Progress payments received from the R91 350.00 client The following additional information was made available: • The amount received from the client represents the value of all work certified less 15% retention money. • When the financial statement for 20x1 were prepared it was estimated that the contract would be completed by 30 January 20x2 and that the plant would have a market value of R8 075.00 on that date. It was estimated that further expenditure on the contract would amount to R18 200.00 • The company has a policy to take, in the financial statements, as part of the estimated total profit on each incomplete contract adjusted for the proportion between the progress payments made to date and the total contract price
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 2
On the 1 March 20x1 Interface Unit started working on a contract with a contract price of
R125 000.00. The following details regarding this contract were extracted from the
records on 31 December 20x1
Details
Material purchased for the contract
Wages paid
Other direct contract expenses
R31 862.50
R35 480.00
R2 657.50
Plant purchased for the contract on 1 R28 437.50
March 20x1
Progress payments received from the R91 350.00
client
The following additional information was made available:
• The amount received from the client represents the value of all work certified less
15% retention money.
. When the financial statement for 20x1 were prepared it was estimated that the
contract would be completed by 30 January 20x2 and that the plant would have a
market value of R8 075.00 on that date. It was estimated that further expenditure
on the contract would amount to R18 200.00
• The company has a policy to take, in the financial statements, as part of the
estimated total profit on each incomplete contract adjusted for the proportion
between the progress payments made to date and the total contract price
Transcribed Image Text:You are required to:
2.1 Calculate the amounts to be transferred to the profit and loss account and reserve
for the contingencies on the contract at 31 December 20x1
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