RST Construction Limited commenced a contract on April 1, 2017. 49,21,875. It was decided to estimate the total Profit on the contract The total contract was for and to take to the credit of Profit and Loss Account that proportion of estimated profit on cash basis, which work completed bore to total Contract. Actual expenditure for the period April 1, 2017 to March 31, 2018 and estimated expenditure for April 1, 2018 to September 30, 2018 are given below : April 1, 2017 to March 31, 2018 (Actuals) April 1, 2018 to September 30, 2018 (Estimated) Materials Issued Labour : 7,76,250 5,17,500 37,500 12,500 4,00,000 2,25,000 25,000 15,000 1,00,000 (Оn September 30, 2017) 22,50,000 25,000 18,75,000 82,500 12,99,375 6,18,750 Paid Prepaid Outstanding 5,750 Plant Purchased Expenses : Paid 3,75,000 10,000 Outstanding Prepaid Plant returned to Store (historical cost) 3,00,000 (On September 30, 2018) Full Work certified Work uncertified Cash received Materials at site 42,500 The plant is subject to annual depreciation @ 25% on written down value method. The contract is likely to be completed on September 30, 2018. Required : Prepare Contract Account. Determine the profit on the contract for the year 2017-18 on prudent basis, which has to be credited to Profit and Loss Account.
RST Construction Limited commenced a contract on April 1, 2017. 49,21,875. It was decided to estimate the total Profit on the contract The total contract was for and to take to the credit of Profit and Loss Account that proportion of estimated profit on cash basis, which work completed bore to total Contract. Actual expenditure for the period April 1, 2017 to March 31, 2018 and estimated expenditure for April 1, 2018 to September 30, 2018 are given below : April 1, 2017 to March 31, 2018 (Actuals) April 1, 2018 to September 30, 2018 (Estimated) Materials Issued Labour : 7,76,250 5,17,500 37,500 12,500 4,00,000 2,25,000 25,000 15,000 1,00,000 (Оn September 30, 2017) 22,50,000 25,000 18,75,000 82,500 12,99,375 6,18,750 Paid Prepaid Outstanding 5,750 Plant Purchased Expenses : Paid 3,75,000 10,000 Outstanding Prepaid Plant returned to Store (historical cost) 3,00,000 (On September 30, 2018) Full Work certified Work uncertified Cash received Materials at site 42,500 The plant is subject to annual depreciation @ 25% on written down value method. The contract is likely to be completed on September 30, 2018. Required : Prepare Contract Account. Determine the profit on the contract for the year 2017-18 on prudent basis, which has to be credited to Profit and Loss Account.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:RST Construction Limited commenced a contract on April 1, 2017.
49,21,875. It was decided to estimate the total Profit on the contract
The total contract was for
and to take to the credit of Profit and Loss Account that proportion of estimated profit on cash
basis, which work completed bore to total Contract. Actual expenditure for the period April 1, 2017
to March 31, 2018 and estimated expenditure for April 1, 2018 to September 30, 2018 are given
below :
April 1, 2017 to
March 31, 2018
(Actuals)
April 1, 2018 to
September 30, 2018
(Estimated)
Materials Issued
Labour :
7,76,250
5,17,500
37,500
12,500
4,00,000
2,25,000
25,000
15,000
1,00,000
(Оn September 30, 2017)
22,50,000
25,000
18,75,000
82,500
12,99,375
6,18,750
Paid
Prepaid
Outstanding
5,750
Plant Purchased
Expenses :
Paid
3,75,000
10,000
Outstanding
Prepaid
Plant returned to Store (historical cost)
3,00,000
(Оn September 30, 2018)
Full
Work certified
Work uncertified
Cash received
Materials at site
42,500
The plant is subject to annual depreciation @ 25% on written down value method. The contract
is likely to be completed on September 30, 2018.
Required :
Prepare Contract Account. Determine the profit on the contract for the year 2017-18 on
prudent basis, which has to be credited to Profit and Loss Account.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education