Contractor Ledger

1. Records amount due to or recoverable from the contractors and

amounts actually paid to him or recovered from him
2. Maintained in Division on Form 43
3. One account is kept for one contractor irrespective of the number of
contractors undertaken by him
4. Personal account must be opened in the ledger for a contractor
whether or not a formal contract has been entered unless the work or
supply entrusted to him is unimportant and no payment is made except
on first and final bill
5. If only materials are issued to the contractor or any payment is made on
his behalf ledger account must be opened.
Column 4 “Advance payment”
corresponds to figure “D” in the running account bill
Column 5 “Secure Advance”
corresponds to figure “E” in the running account bill
(Net advance paid “+” and amount recovered “-”)
Column 6 --- “other transactions”---
Posting in this column may be made as:-
i) In case of running account bill------ figure “G” should be posted i.e.
5(b) + 8 (a)
ii) In case of first and final bill------ no entry should be made unless a
recovery is made from contractor on any account.
iii) In other cases: the amount paid or recovered from the contractor
should be entered in terms of value
a) Value of material issued “+” recovered “-”
b) Fine for bad work----- when levied “+” when recovered “-”
c) Amount withheld “-” amount released “+”
d) Expenditure incurred on contractor’s cost “+”, when recovered “-”
Column 8--- Debit
In case of running account bills---
figure “H” should be posted i.e. amount of checque plus recoveries
creditable to other works / head of accounts
i.e. H = 8 (b) + 8 (c)
In other cases amount payable to the contractor is posted.
Column 9--- Credit
In case of running account bills---
figure “F” should be posted
 In other cases amount payable to the contractor is posted.
Column 10--- “Total value of work / supply” refer to---
Figure “A” of the contractor’s bill
Note:
 Ledger account should be closed and balanced monthly
 After closing, the personal account should be detailed so as to show
the amounts outstanding in the three suspense accounts i.e. advance
payment , secured advance and other transactions
 Divisional Accountant should ensure the correctness of the
contractor’s ledger
Important Points
(i) Column 8 (-) column 9 = column 4 + column 5 + column 6
i.e. H – F = D + E + (-) G
(ii) In case the contractor delays receiving the payment of his bill for more
than one month after the bill has been passed, the amount due to him
may be credited to Public Works Deposits
(iii) In case the contractor has been overpaid, then the net amount
recoverable may be debited to Miscellaneous Public Works Advances.
 Transactions that do not form part of the contractor ledger.
1. If the contractor bill has been prepared and passed for payment but
has not yet been paid.
2. Fine for delay
3. Security deposits
4. Hire charges of T&P
5. Recoveries pertaining to other divisions.
6. First and final bill
7. Material issued to contractor where the contractor for labour only
1st running bill paid to contractor for work “X” as per following details.:
Value of work done & measured = Rs 35000; secured advance = Rs
17,000, advance payment = Rs 10,000; security deposit @ 10% and
income tax @ 2%
Advance Secured Mob: Other Name Debit Credit Total work
Payment advance advance transactions

4(D) 5 (E) 5a (E1) 6 (G) 7 8 (H) 9 (F) 10 (A)

10,000 17,000 - 0 X 62,000 35,000 35,000

Now check: - column 8 – column 9 = column 4 + column 5 + column 5a

- column 6
 Another method (short cut)
 
Column 4, D = 10,000
Column 5, E = 17,000
Column 5a E1 = 0
Column 6, G = 0
Column 9, F = 35,000
Column 10, A =
Column 8, H = D + E + -G + F = 10,000 + 17000 – 0 +35,000 = 62,000
Paid 2nd running bill in respect of work “A” as per following details:
 Value of work done upto date = Rs 49,000; advance payment made in 1 st
running bill recovered = Rs 13,000; secured advance made in 1 st running
bill recovered = Rs 19,000; advance payment made in 2 nd running bill = Rs
9,000; secured advance given now = Rs 14,000; value of work done in 1 st
running bill = Rs 26,000; income tax @ 2% and security deposit @ 10 %;
cost of cement issued = Rs 7,200; fine for delay = Rs 800; fine for bad work
= Rs 1,200
 Post the contractor ledger.

Advance Secured Mob: Other Name Debit Credit Total work

Payment advance advance transactions
4(D) 5 (E) 5a (E1) 6 (G)   8 (H) 9 (F) 10 (A)
- - 0 7,200   7,200 - -
- - 0 1,200   1,200 - -
- 4,000 - 5,000   -8,400   5,600 23,000 49,000