21 June 2010
if we contrac with a party to supply material for constrction at site for Rs.5000000. Journal entry of bill Party A/c Dr. 500,000 To contrac receipt A/c 500,000 During construction Party itself introduced materials costing Rs.250,000. Sir, Now what will be journal entry in our book for Rs. 250,000. In my opinion it shoud be Conract Receipt A/c Dr/ 250,000 To Party A/c 250,000 Is This Right?
23 June 2010
The contract can be of two types i.e cost plus contract and fixed price contract. under cost plus contract, the contractor receives a fixed % of profit over and above the cost incurred whereas in fixed price contract, the contractor receives a fixed amount from contractee irrespective of expenses incurred by him. In ur case, in absence of details, no enrty will be passed in the books of contractor for the expenses incurred by the contractee (assumed to be as per terms of contract)as only the possession but not the ownership is passed on to the contractor
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