Question

The capital projects fund of Hood River completed construction of an addition to its city hall at a cost of $4,000,000. The city council approved payment of the amount due the general contractor, less a 10 percent retainage. How should the capital projects fund account for the 10 percent retainage

Answer 1

The capital projects fund account for the 10 percent retainage as (B) II only.

What is retainage?

• Retainage is a percentage of the agreed-upon contract price withheld until the work is substantially completed to ensure that the contractor or subcontractor will fulfill its responsibilities and complete a construction project.
• Retention is money kept back by one party in a contract as security for unfinished or defective work.
• Assume the contract is worth $20,000 and you're submitting a paid app after finishing 25% of the work.
• So you earned $5,000 during the pay period, but retainage is 5%. The current progress payment has been reduced by $250.
• As a result, the "Amount Due for this Request" will be $4,750.

So, in the given situation the capital projects fund account for the 10 percent retainage as (II) the credit for $400,000 to Contracts Payable-Retained Percentage, that is (B) II only.

Therefore, the capital projects fund account for the 10 percent retainage as (B) II only.

Know more about retainage here:

brainly.com/question/24101126

#SPJ4

The correct question is given below:
The capital projects fund of Hood River completed the construction of an addition to its city hall at a cost of $4,000,000. The city council approved payment of the amount due to the general contractor, less a 10 percent retainage. How should the capital projects fund account for the 10 percent retainage?

I. As a credit of $400,000 to Deferred Revenue-Retained Percentage

II. As the credit for $400,000 to Contracts Payable-Retained Percentage.

A. I only

B. II only

C. Either I or II

D. Neither I nor II