Reference no: EM132626647

The Unda Construction Company Limited began to work on July 1 on a parking bay contract awarded by Donge county valued at sh.14,000,000. The retention is 15%. As at December 15, the certified work done (gross) amounted to sh.6,400,000.

The following information regarding the contract is available:

                                                                                                      sh.

Materials delivered direct to contract                            1,600,000

Materials issued from stores                                           300,000

Wages                                                                    3,000,000

Apportionment of overhead to Dec. 31                          500,000

Plant sent to contract at valuation                              27,000,000

Plant returned from contract on Nov. 30 at valuation   17,800,000

Plant remaining on contract at Dec. 31 at valuation    8,600,000

Accrued wages to Dec. 31                                       130,000

Materials return to stores                                           60,000

Work done not yet certified @ Dec. 31, at cost             480,000

Materials on site at Dec. 31                                         350,000

Problem 1: You are required to prepare the contract account and recommend the profit to be recognised at Dec. 31