In late April, the Acme Construction Co. submitted a $1,200,000 progress billing on a construction contract. On May 2, the bill was approved for payment, subject to a ten percent retention, as provided by the contract. The amount that should be debited to Construction Expenditures is:

$ 0.

$ 12,000.

$1,080,000.

$1,200,000.

Question

Business

Luciano Powers

4 June, 10:45

In late April, the Acme Construction Co. submitted a $1,200,000 progress billing on a construction contract. On May 2, the bill was approved for payment, subject to a ten percent retention, as provided by the contract. The amount that should be debited to Construction Expenditures is:

$ 0.

$ 12,000.

$1,080,000.

$1,200,000.

+5

Answers (1)

Know the Answer?

Cora Powers · Answer 1

Answer: The answer is $1,080,000

Explanation:

Step one:

Since the said approved amount is

$1,200,000 and it is subject to 10% retention

10%of $1,200,000=

10/100*$1,200,000=$120,000

Step two:

The amount that should be debited to Construction Expenditures is approved amount

$1,200,000 minus 10% retention amount

$1,200,000-$120,000

$1,080,000