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8 March, 16:59

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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  1. 8 March, 20:41
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    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
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Home » Business » 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.
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