Brief Exercise 22-1 At e beur ning u 201 / Vaughn Corstu on Cuma any charge rum

Question

Brief Exercise 22-1 At e beur ning u 201 / Vaughn Corstu on Cuma any charge rum the competed contrect rret to recognizing revenue overt me percente e-o completion to 2017, pretax incom? under the two methods was as follows: pcrcentage-of-competlan si 30,900, and completed-contract 81.00. The tax rate is 30%. gtarontract 5e 0 or find aal repcrti purposes. I he curr any wi continue o use e mpleted o tract method ????tax puposes. Por ears pric? prepare Vaughn's 2 17]u ma ertry to record the cha ge ir accounting Pnnciple. Credit account tites are ?utomatically ma ented when amount is entered. Do not indent manuaNy If no entry is requ e setect No Entry for the account t es and enter for the amounts.

Explanation / Answer

Construction in process A/c Dr 1,30,900

To Income from construction A/c 1,30,900

( Being income recognised in Percentage-of-completion Method)

Note: Due to change in the accounting policy we have to disclose that disclosure in the note's to form part

of accounts.

as said in the question for tax purpuses they continue in the completed contract method so,

Profit & Loss A/c dr 24,300 (81,000*30/100)

To Provision for tax A/c 24,300

( Being Provison for tax made)

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