6. Assuming the partial billing was approved for payment and the expenditure and liability (contracts payable) was recorded for $700,000; however, Oxford has a policy of not paying 100 percent, but retaining 20 percent as a retained percentage. The entry in the Capital Projects Fund to record the allowed payment and retained percentage would include: A. Credit to Cash, $560,000. B. Debit to Contracts Payable, $560,000. C. Credit to Contracts Payable-Retained Percentage, $560,000. D. Debit to Contracts Payable, $140,000

Question

Business

Charles Griffin

8 February, 14:34

6. Assuming the partial billing was approved for payment and the expenditure and liability (contracts payable) was recorded for $700,000; however, Oxford has a policy of not paying 100 percent, but retaining 20 percent as a retained percentage. The entry in the Capital Projects Fund to record the allowed payment and retained percentage would include: A. Credit to Cash, $560,000. B. Debit to Contracts Payable, $560,000. C. Credit to Contracts Payable-Retained Percentage, $560,000. D. Debit to Contracts Payable, $140,000

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Answers (1)

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John Hart · Answer 1

Option A, Credit to Cash, $560,000

Explanation:

As per the data given in the question,

Expenditure and liability = $700,000

Retaining percentage = 20%

Assuming the partial billing was certified for expenses and payments and liability was approved for amount $70,000. Though, Oxford has a policy not to pay 100 percent, but to retain 20 percent as a retained percentage.

So, $700,000 - $700,000 * 20%

= $700,000 - $140,000

= $560,000

Therefore, The entry to record the approved payment and retained percentage would include:

Option A, Credit to Cash, $560,000