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  3. illustration 8 deluxe limited undertook a contract

Illustration 8 Deluxe Limited undertook a contract for $ 5,00,000 on 1st July, 2017. On...

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Illustration 8 Deluxe Limited undertook a contract for $ 5,00,000 on 1st July, 2017. On 30th June, 2018 when the accounts were closed, the following details about the contract were gathered: $ $ Materials Purchased 1,00,000 Wages Accrued 30-6-2018 5,000 NVages Paid 45,000 Work Certified 2,00,000 General Expenses 10,000 Cash Received 1,50,000 Plant Purchased 50,000 Work Uncertified 15,000 Materials on Hand 30-6-2018 25,000 Depreciation of Plant 5,000 The above contract contained an escalation clause which read as follows: "In the event prices of materials and rates of wages increase by more than 5%, the contract price would be increased accordingly by 25% of the raise in the cost of materials and wages beyond in account the effect of Prepare the contract account. Working should form part of the

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