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collections to October 31 is the difference between $1,643,000 and $1,641,600, or $1,400. During November he will pay out $130,100, making his total cash in the job at the end of November, before deducting the November collection, equal $131,500, exclusive of November payrolls and November bills. His November collections will be $150,840. At the end of that month his collections will therefore be $19,340 more than his disbursements for work to October 31. It must be kept in mind, however, that disbursements are the contractor's costs and collections are his selling prices. The gross amount of an application should equal his cost, plus profit, unless the terms of his contract provide that he can only collect for materials furnished and installed monthly. Some materials will always be delivered to the job but not actually erected or installed.

Modifications

This statement can be made to serve the purposes of an approximate financial budget. An additional column would be provided to indicate the disbursements for obligations of the subsequent month, that is, the extra column would contain the approximate sums to be paid on each job during the month of November for November payrolls and November deliveries of materials, etc. A summary could then be made. on the statement which would be as follows:

Cash on Hand, October 31..

Collections from owners during November, as above...

35,000

150,840 $185,840

November payment of October obligations, as above... $130, 100
November payrolls and material bills (special column)

Estimated Cash on Hand, November 30...

50,000 180, 100

$ 5,740

If the contractor had miscellaneous cash receipts or had miscellaneous disbursements not included in the $50,000 figure,

STATEMENT OF UNCOMPLETED CONTRACTS SHOWING VOLUME of Work, Gross ProFIT, AND TIME OF COMPLETION

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$2,757,000 $1,000,000 $550,000 $275,000 $500,000 $432,000

$2,757,000 $1,000,000 $550,000 $275,000 $500,000 $432,000

41,000

30,000

II,000

$2,716,000 $1,000,000 $520,000 $264,000 $500,000 $432,000

$150,000 $50,000 $25,000 $35,000 $32,000

†9,000

25,000

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9,000 t10,000 +35,000 $175,000 $50,000 $34,000 $105,000 $37,500 $30,600

$25,000 +$3,000

$18,750

†$2,700

V 3 Total Contracts and Extras. V 4 Savings Reverting to Owners.

V 5 Ultimate Cost to Owners.

V 6 Work Completed End Preceding Fiscal Year.*

GROSS PROFIT ON WORK

PI Estimated Profit on Contracts and Accepted Changes.

P 2 Increase or Decrease in Profit, due to Pending Changes or Construction Gain or Loss or Construction Expense (uncollectible)

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$292,000

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* V 6, "Work Completed End Preceding Fiscal Year," is added whenever profit is figured on partially completed contracts and appears under "P 5.

† Losses (indicated in red).

Excess of disbursements over collections (indicated in red).

provision for such receipts and disbursements would have to be made in the form of summary adopted.

STATEMENT B-(Form 25)

Purpose

The chief difference between statement A and statement B is that some information obtainable from the former statement only by a comparison of columns is prepared in detail on the latter statement. This statement is divided into four sections: (1) "Volume of Work," (2) "Gross Profit on Work," (3) "Requisitions to Owners," (4) "Comparison of Collections with Disbursements." The purpose of the "Volume of Work" section is to show the ultimate cost of work to all owners; that of the second section, the profit on such work; that of the third section, a comparison of the applications to the owner with the cost to the contractor, plus his profit; and the last section, whether disbursements exceed collections or collections are greater than disbursements.

Preparation

The greater part of the information on statement B is similar to that on statement A and is taken from the same sources. Under "Volume of Work," a provision is made for "Changes Pending Acceptance." This expression should not be confused with "Contemplated Changes" which are changes in contemplation but which have not been ordered made. "Changes Pending Acceptance" means such changes as the architect has ordered made without determining their value when directing the work to proceed. The value of such changes is obtained from the employee in charge of changes who examines his records and furnishes the accounting department with the information. The estimated profit on such unaccepted changes is also given to the accounting department.

Some charges against construction will be received after

the books have been closed and trial balances taken off. When they are for other than nominal amounts, their total is shown under "R-2." The purpose of this section is quickly to determine whether the applications to the owners are for the proper amount. It will be noticed that in the illustration the Hudson application is less than cost, plus profit.

The section dealing with the comparison of collections with disbursements quickly indicates the jobs on which disbursements are in excess of collections. The amounts appear in red.

The sums shown as "Notes, Bonds, etc.," represent that portion of a contract price paid to a contractor in other form than cash and ultimately retained by him. A comparison of these sums with those under "Profit" reflects what part of the profit, "P-3," is received in cash and what part in some other form.

Purpose

STATEMENT C—(Form 26)

This statement is an operating summary giving advance notice of the time when profits on construction work will be consumed by overhead expense. The figures on line “O-1” are the same as those given in the "Gross Profit" section. "Profit on Equipment," if any, is taken from the balance sheet for earnings to date and estimated for the balance of the fiscal period. This is true also of the expense figures shown.

A contractor may have other sources of income and may pay interest on bank loans, but neither of these has any relation to a comparison of net construction profits with overhead

expense.

If the contractor has more than one accounting office, statements should be prepared by each office, while the main. office should consolidate the results shown by all statements.

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