Prepare the contract account, Financial Accounting

Assignment Help:

During its financial year ended 30 June 20x7 Beavers Ltd, an engineering company, has worked on several contracts. Information relating to one of them is given below.

Contract X201

 

Date Commenced

1 July 20X6

Estimated Completion Date

30 Sept 20X7

Contract Price

RO 240,000

Proportion of work certified as satisfactorily completed (and invoiced) up to June 20X7

RO 180,000

Amount received from contractee

RO 150,000

Costs up to 30 June 20X7

 

Wages

RO 91,000

Material sent to site

RO 36,000

Other contract costs

RO 18,000

Proportion of head office costs

RO 6,000

Plant and equipment transferred to the site (at book value on 1 July 20X6)

RO 9,000

The plant and equipment is expected to have a book value of about RO 1,000 when the contract is completed.

Stock of materials at site on 30 June 20X7

RO 3,000

Expected additional costs to complete the contract

 

Wages

RO 10,000

Materials (including stock at 30 June 20X7)

RO 12,000

Other (including head office costs)

RO 8,000

Company policy is to recognize profit on contracts as follows

 

Profit to be recognized = {Value of work certified / Total contract value} x Estimated total

                                                                                                                     Contract Profit

a)  Prepare the Contract account.

b) The profit to be recognized on the Contract to date.

c)  The amount to be shown on the company balance sheet as at 30 june 20X7 in respect on Contract X201 are:

a.  Stocks

b.  Debtors


Related Discussions:- Prepare the contract account

Calculate the new interest rate and excel function pv, Continuing growth of...

Continuing growth of the company has required that we issue the company's corporate debt soon. As you know, in 6 months we plan to issue $10 million worth of 20-year corporate bond

Generally accepted accounting principles (gaap), Generally Accepted Account...

Generally Accepted Accounting Principles (GAAP) are guidelines for companies to follow as tehy prepare and issue financial statements. Let's start by getting an understanding of wh

What is the pretax stock compensation, Refer to the Consolidated Statements...

Refer to the Consolidated Statements of Shareholders' Equity (pp. 62-63), Consolidated Statements of Cash Flow, including an abstract from Note 2, Cash Flow Information (pp. 61 and

Trust accounts-breach of law-trusts accounts, TRUST ACCOUNTS (a) Obje...

TRUST ACCOUNTS (a) Object of trust accounts : To demonstrate that the trust funds have been applied in accordance with the trust instrument; To give details of tra

Ppe, WHAT IS PPE?

WHAT IS PPE?

Property, Hi! Here are the case: Acquisition of Assets: The cost method ...

Hi! Here are the case: Acquisition of Assets: The cost method of accounting is used for the initial recording of all acquisitions of assets controlled by the authority. Cost is

Which actions are most likely to directly increase cash, Which of the follo...

Which of the following actions are most likely to directly increase cash as shown on a firm's balance sheet? Explain and state the assumptions that underlie your answer. 1. It i

Quantitative techniques, Evaluate 1-1/3(5/6 - 1/2) ---------------- 2/5 / ...

Evaluate 1-1/3(5/6 - 1/2) ---------------- 2/5 / 2/5(5/6-2/3)

Archer daniels midland company is considering, Archer Daniels Midland Compa...

Archer Daniels Midland Company is considering buying a new farm that it plans to operate for 10 years. The farm will require an initial investment of $12.00 million. This investm

Clarity and transparency in project, Clarity and transparency The terms...

Clarity and transparency The terms of the payment package must be clear and transparent so that directors and shareholders are in no doubt as to when rewards have been earned o

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd