Jaya Bhd. makes up its accounts to 31 December each year. The following details have been extracted in relation to the contract P. The contract price is RM3,100,000.
When the contract commenced in June 2019, plant and equipment, costing RM420,000, was sent to the site. This has been revalued at RM400,000 on 31 December 2019. The wages for the last week of December in 2019, RM5,360, was paid in January 2020. As at 31 December 2019, the total cost incurred was RM211,060. Because the contract was at an early stage of completion, the company decided that no profit would be taken at 31 December 2019, for the work to date.
At 31 December 2020, the costs to date charged to the contract were based on the following information:
Materials delivered and charged to the site 725,800
Materials returned to store 1,800
Labour costs paid 671,200
Overheads, excluding depreciation 482,900
Additional plant and equipment 375,000
Additional information at 31 December 2020:
(i) Plant and equipment on site was valued at RM585,000.
(ii) Unused materials in the site were valued at cost, RM28,000.
(iii) Wages accrued were RM11,200.
The company has decided to take profit from the contract into the accounts for the year ended 31 December 2020.
You are required to :
(a) Prepare the contract account for the year ended 31 December 2020.
(b) Based on the answers calculated in (a) above, calculate the depreciation of the plant and equipment, and the cost of materials used, for the year ended 31 December 2020.
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