Contract Account – NBC Institute

MI – May 2021 – L1 – SB – Q2 – Costing Methods

Preparation of contract accounts and financial position for Segelu Nigeria Limited.

Question

Segelu Nigeria Limited is a construction company located in Bukuai Local Government. The company commenced the construction of a health centre building on 3 January, 2018 for a contract price of N30,000,000 with completion date of February 2019. Estimated cost of the contract was N21,000,000. The construction company’s financial year end was 30 September 2018, with the following balances extracted from the books of accounts on that date.

Description	Amount (N)
Materials issued to site	3,220,000
Materials returned from site	250,000
Wages of workers paid	1,250,000
Own plant in use on site (at cost)	2,200,000
Plant hire and scaffolding	1,050,000
Head office expenses	1,220,000
Supervisory staff: direct	485,000
Supervisory staff: indirect	480,000
Value of work certified to 30 September 2018	16,200,000
Cost of work not yet certified	2,150,000
Progress payments	12,150,000
Material on site 30 September 2018	580,000
Workers’ wages due but unpaid	125,000

Depreciation on plant is to be provided at the rate of 15% per annum on cost.

You are required to prepare:
a) The contract account as at 30 September 2018 assuming the contract commenced 3 January 2018.
b) Contractee account.
c) An extract from the construction company’s financial position at 30 September 2018. (Total 20 Marks)

Answer

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Tags: Construction, Contract Account, Financial Position, Segelu Nigeria Limited
Level: Level 1

Topic: Costing Methods
Series: MAY 2021

FA – May 2021 – L1 – SB – Q2a – Bank Reconciliation

Preparation of a contract account showing the costs, revenues, and profit recognized for the period.

Question

The following is a summary of the cash book of Babagana Limited for the month of March 2019.

N’000
Receipts	Payments
22,035	11,930
Balance b/f 18,415	Balance c/d 8,310
30,345	30,345

All receipts are banked and payments made by cheque. On investigation, you discovered that:

Bank charges of N2,040,000 entered on the bank statement had not been entered in the cash book.
Cheques drawn amounting to N4,005,000 had not been presented to the bank for payment.
Cheques received amounting to N11,430,000 had been entered in the cash book and paid into the bank, but had not been credited by the bank until April 2019.
A cheque for N330,000 had been wrongly entered as a receipt in the cash book.
A cheque drawn had been overstated by N375,000.
A cheque of N1,200,000 received had been returned by the bank. No adjustment had been made in the cash book.
All dividends receivable are credited directly to the bank account. During March 2019, amounts totaling N930,000 were credited by the bank and no entries were made in the cash book.
A cheque drawn for N90,000 had been incorrectly entered in the cash book as N990,000.
The bank statement as at 31 March 2019 showed an overdraft of N17,430,000.

Required:

i. The adjustments required in the cash book (5 Marks)
ii. Starting with balance as per bank statement, prepare a bank reconciliation statement as at March 31, 2019. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Construction, Contract Account, Financial Statement
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2021

MI – May 2021 – L1 – SB – Q2 – Costing Methods

Preparation of contract accounts and financial position for Segelu Nigeria Limited.

Question

Description	Amount (N)
Materials issued to site	3,220,000
Materials returned from site	250,000
Wages of workers paid	1,250,000
Own plant in use on site (at cost)	2,200,000
Plant hire and scaffolding	1,050,000
Head office expenses	1,220,000
Supervisory staff: direct	485,000
Supervisory staff: indirect	480,000
Value of work certified to 30 September 2018	16,200,000
Cost of work not yet certified	2,150,000
Progress payments	12,150,000
Material on site 30 September 2018	580,000
Workers’ wages due but unpaid	125,000

Depreciation on plant is to be provided at the rate of 15% per annum on cost.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Construction, Contract Account, Financial Position, Segelu Nigeria Limited
Level: Level 1

Topic: Costing Methods
Series: MAY 2021

FA – May 2021 – L1 – SB – Q2a – Bank Reconciliation

Preparation of a contract account showing the costs, revenues, and profit recognized for the period.

Question

The following is a summary of the cash book of Babagana Limited for the month of March 2019.

N’000
Receipts	Payments
22,035	11,930
Balance b/f 18,415	Balance c/d 8,310
30,345	30,345

All receipts are banked and payments made by cheque. On investigation, you discovered that:

Bank charges of N2,040,000 entered on the bank statement had not been entered in the cash book.
Cheques drawn amounting to N4,005,000 had not been presented to the bank for payment.
Cheques received amounting to N11,430,000 had been entered in the cash book and paid into the bank, but had not been credited by the bank until April 2019.
A cheque for N330,000 had been wrongly entered as a receipt in the cash book.
A cheque drawn had been overstated by N375,000.
A cheque of N1,200,000 received had been returned by the bank. No adjustment had been made in the cash book.
All dividends receivable are credited directly to the bank account. During March 2019, amounts totaling N930,000 were credited by the bank and no entries were made in the cash book.
A cheque drawn for N90,000 had been incorrectly entered in the cash book as N990,000.
The bank statement as at 31 March 2019 showed an overdraft of N17,430,000.

Required:

i. The adjustments required in the cash book (5 Marks)
ii. Starting with balance as per bank statement, prepare a bank reconciliation statement as at March 31, 2019. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Construction, Contract Account, Financial Statement
Level: Level 1

Topic: Bank reconciliations
Series: MAY 2021

Question Tag: Contract Account

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MI – May 2021 – L1 – SB – Q2 – Costing Methods

Preparation of contract accounts and financial position for Segelu Nigeria Limited.

FA – May 2021 – L1 – SB – Q2a – Bank Reconciliation

Preparation of a contract account showing the costs, revenues, and profit recognized for the period.

MI – May 2021 – L1 – SB – Q2 – Costing Methods

Preparation of contract accounts and financial position for Segelu Nigeria Limited.

FA – May 2021 – L1 – SB – Q2a – Bank Reconciliation

Preparation of a contract account showing the costs, revenues, and profit recognized for the period.

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MI – May 2021 – L1 – SB – Q2 – Costing Methods

Preparation of contract accounts and financial position for Segelu Nigeria Limited.

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FA – May 2021 – L1 – SB – Q2a – Bank Reconciliation

Preparation of a contract account showing the costs, revenues, and profit recognized for the period.

You're reporting an error for "FA – May 2021 – L1 – SB – Q2a – Bank Reconciliation"

MI – May 2021 – L1 – SB – Q2 – Costing Methods

Preparation of contract accounts and financial position for Segelu Nigeria Limited.

You're reporting an error for "MI – May 2021 – L1 – SB – Q2 – Costing Methods"

FA – May 2021 – L1 – SB – Q2a – Bank Reconciliation

Preparation of a contract account showing the costs, revenues, and profit recognized for the period.

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