Balance Sheet of Contractor
Placement of important items in the balance sheet of contractors
Example:
The following particulars are obtained from the books of Vinak Construction Ltd. as on March 1983:
Plant and Equipment at cost Rs. 4,90,000
Vehicles at cost Rs. 2,00,000
Details of contract which remain uncompleted as on 31.03.1983:–
Contract Nos.
|
Contract Nos |
Contract Nos |
Contract Nos |
|
|
V.20 |
V.24 |
V.25 |
|
|
(Rs. Lacs) |
(Rs. Lacs) |
(Rs. Lacs) |
|
| Estimated final sales value |
7.00 |
5.60 |
16.00 |
| Estimated final cost |
6.40 |
7.70 |
12.00 |
| Wages |
2.40 |
2.00 |
1.20 |
| Materials |
1.00 |
1.10 |
0.44 |
| Overheads(excluding depreciation) |
1.44 |
1.46 |
0.58 |
| Total costs to date |
7.20 |
4.20 |
2.40 |
| Process payments received |
5.00 |
3.20 |
2.00 |
Depreciation of Plant and Equipment and Vehicle should be charged at 20% to the three contracts in proportion to work certified.
You are required to prepare statements to show contract wise and total:
(i) Profit/loss to be taken to the P&L A/c for the year ended 31st March 1983;
(ii) Work-in-progress as would appear in the Balance Sheet as at 31st March 1983.
Solution
Vinak Construction Co. Ltd.
Statement of Profit / Loss to be taken to Profit & Loss Account
(for the year ended 31st March, 1983)
| Contract nos | Contract nos | Contract nos | Contract nos | |
| V.20 | V.24 | V.25 | Total | |
| (Rs.Lacs) | (Rs.Lacs) | (Rs.Lacs) | (Rs.Lacs) | |
|
||||
| Estimated sales value | 8.00 | 5.60 | 16.00 | —- |
| Work certified | 7.20 | 4.20 | 2.44 | —- |
| Percentage of completion | 90 | 75 | 15 | —- |
| (See Note 1) | ||||
|
||||
| Estimated sales value | 8.00 | 5.60 | 16.00 | —- |
| Estimated costs | 6.40 | 7.00 | 12.00 | —- |
| Estimated profit (loss) | 1.60 | (1.40) | 4.00 | —- |
|
||||
| Work certified | 7.20 | 4.20 | 2.10 | 13.80 |
| Cost to date(excluding deprecation) | 4.84 | 4.56 | 2.22 | 11.62 |
| Depreciation (See note 2) | 0.72 | 0.42 | 0.24 | 1.38 |
| Total cost | 5.56 | 4.98 | 2.46 | 13.80 |
| National profit (loss) | 1.64 | (0.78) | (0.06) | 0.80 |
| Profit (loss) to be taken to profit & loss account (See note 3) | 1.00 | 1.40 | 0.06 | 0.46 |
| Reserve for contingencies (See note 4) | 0.64 | 0.62 | —- | 1.26 |
Vinak Construction Co. Ltd.
Statement of Work-in-Progress as would appear in
Balance Sheet on 31 March, 1983
| Contract nos | Contract nos | Contract nos | Contract nos | |
| V. 20 | V. 24 | V. 25 | Total | |
| (Rs.Lacs) | (Rs.Lacs) | (Rs.Lacs) | (Rs.Lacs) | |
| Work Certified | 7.20 | 4.20 | 20.40 | 13.80 |
| Less Reserve for contingencies | 0.64 | 0.62 | —- | 1.26 |
| Less: Payment received | 5.00 | 3.20 | 2.00 | 10.20 |
| Work in progress | 1.56 | 0.38 | 0.40 | 2.34 |
Working Note
