Profit on cost of Rs.9.41.67 lakhs is Rs.158.33 lakhs. Therefore, profit on cost to date...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Profit on cost of Rs.9.41.67 lakhs is Rs.158.33 lakhs. Therefore, profit on cost to date of Rs.550 lakhs. Work Certified = 550 x 158.33 / 941.67 = Rs. 92.48 lakhs = Cost + Profit = Rs. 550 + Rs. 92.48 = Rs. 642.48 lakhs Degree of completion of contract is: = 642.48 x 100/1,100 = 58.41% The contract is more than half complete. Profit to be taken to Profit and Loss Account of the year is: 2/3x National Profit x Cash Received/Work Certified = 2 x 92.48 x 600 3 x 642.48 = Rs. 57.58 lakhs S4 Illustration: Kapoor Engineering Company undertakes long term contracts which involves fabrication of pre-stressed concrete blocks and erection of the same on consumer's side. The following information is supplied regarding contract 666 which is incomplete on 31. 3. 2016 Fabrication Rs. Direct Materials 2.80,000 Direct Labour 90,000 Overhead 75,000 4.45.000 Erection cost to date 15.000 Total 4,60,000 Contract price 8,19,000 Cash received on account 6,00,000 A technical estimate of completion of work: Fabrication - Direct Materials. 80%, Direct labour and overheads 75%; Erection - 25%. You are required to prepare 1. Estimated profit on completion of contract 2. Estimated profit to date on contract
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
