Question

Part B (10 marks) Muronga Ltd supplied the following details regarding a contract that was still in progress at the end of the accounting period ended 29 February 2019: Contract price N$ 100 000 Cost to date N$60 000 Estimated costs to completion N$12 000 Sales value of work certified N$75 000 Cost of certified work N$50 000 Retention amount N$7 500 Required: Calculate the amount of profit on this contract that may be transferred to the profit and loss account for the past accounting period, using each of the following methods: 3.3 The work certified method 3.4 The percentage of completion method Total

Answer 1

Answeg - Page 1 Using Calculating the amount & poolit on the contract that transfered to the poolit and loss account to the past accounting period using percentage of completion method degree of completion of contract to date is = work Certified / contract price X 100 = 50,000 (100,000 X 100 = 0,5x100 = 500l using percentage o completion method The contract is more than 50% in this case, two third of the national profit, reduced by the portion of cash greceived to work Certified may be transfeared to profit and loss account. notional price - Value of work Certified - cost of work certified = 75000 - 50,000 = 25000 profit credited to profit and loss account: = Q/3 X national profit x 50/100 = Q3 X 95,0000x 50100 = 83333. 33 csscanned with CamScanner = $8333