Compute the contract profit to be taken to the company

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Reference no: EM133380131

Question

Eagle Construction Company Limited won the contract for building Mbaraka Industrial college at a cost of Sh. 120 million. For the company's financial year ended 31 March 2020 the data relating to the contract were as follows:

Sh. '000'

Material issued to the site 21,500

Cost of labour engaged on contract 3,600

Plant purchased and installed1 8,000

Direct expenditure 4,800

General Management charges 1,750

Material returned to the store 2,500

Work certified 25,000

Cost of work not certified 7,000

Stock of materials on site 31.3.2020 2,000

Wages accrued 31.3.2020 300

Value of plant on 31.3.2020 2,000

The company had received from the College, payments amounting to Sh. 20 million.

REQUIRED

Prepare the Contract Account
Prepare the Contractee's Account
Compute the contract profit to be taken to the Company's profit and loss account. Explain with reasons why you have used the computation method you have adopted.

Reference no: EM133380131

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