Ury plc is a house building firm specialising in the construction of 3 and 4 bedroom kit houses. Two contracts were started during Year 1 Contracts Crichie and Davah

3. Ury plc is a house building firm specialising in the construction of 3 and 4 bedroomkit houses. Two contracts were started during Year 1: Contracts Crichie and Davah.The following information was available on 31 December Year 1.Contract – Crichie£000sContract price 920Kits imported 200Shipping cost for kits 13Materials purchased 80Material issued from stores 23Material transferred to Contract Davah 8Direct wages paid 140Direct site expenses paid 51Plant and machinery sent to site (at valuation) 100Sub contract costs 43Professional architects fees 12Balances at 31 December:Work completed but not yet certified 40Work certified complete 690Value of Plant and machinery on site 75Direct wages accrued 12Direct expenses prepaid 3Materials on site 61. During the year materials costing £20,000 were damaged on site, 25% of whichwere scrapped and sold for 40% of the value. The remainder were disposed of atno cost.2. Company overheads costing £90,000 are to be shared out on a Prime Cost basisbetween Contract Crichie and Davah. Contract Davah had Prime Cost of£400,000.3. Any profits on incomplete contracts are recognised using the formula:• Notional Profit × Value of Work Certified/Contract Price4. All contracts allow house purchasers to retain 5% of the value of work certifiedfor a period of 1 year after the completion date.(a) Prepare the account for Contract Crichie at 31 December Year 1, showing yourcalculation and treatment of any profit or loss.(b) (i) Calculate the amount paid to date to Ury plc by its clients for ContractCrichie.(ii) Explain why the clients do not pay the full amount due at the completiondate.(c) Explain the significance of establishment costs to a firm beginning a newcontract.

“Custom Writers 24/7” We have the Best Writers in the industry