What accounts are posted to when I use a Retention fee on a Cost Plus or Fixed Price project?
Upon Billing the Project fee:
Debit - Accounts Receivable
Credit - Project Billing
Upon doing Revenue Recognition:
Debit - Project Work in Progress
Credit - Project Revenue
Note - The Earnings in Excess of Billings account could be used if the Revenue Recognition process is done before or in a higher dollar value than the Billings. If this is done, Earning in Excess of Billings will be debited during Revenue Recognition and then credited to be brought back down to a $0 balance during the final Revenue Recognition.
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