What is retainage receivable?
For a contractor, retainage works two ways. Accounts receivable retention refers to money the customer holds back that they’ll eventually pay to the contractor. Accounts payable retention is the money the contractor retains until disbursing it to subcontractors.
Should retainage be included in accounts receivable?
When the contractor has the right to receive the retention billed to date with the only condition being the passage of time, the retention billed should be classified as a component of accounts receivable.
What is retainage on AIA form?
Therefore, the form isn’t technically an invoice. It’s just an application detailing the amount you’d like to invoice. What Is Retainage? Also called “retention,” retainage is a percentage of a contract, often 5-10%, that can’t be billed until the entire project is complete and the client has approved the work.
What is the journal entry for retainage receivable?
Applying Accounts Receivable Retention When an invoice with retention is first entered, the net invoice amount (invoice balance minus retention) is debited to the Accounts Receivable account, and the retention amount is debited to the Retention Receivable account.
How do you record retention receivables?
What is a AIA document?
AIA contracts and forms are consensus documents that reflect advice from practicing architects, contractors, engineers as well as owners, surety bond producers, insurers, and attorneys. AIA documents balance the interests of all the parties, so no one interest, including that of the architect, is unfairly represented.
What is retainage on an invoice?
Retainage is the holding back of a certain amount of money paid to contractors and subcontractors to ensure a project is completed and done well. This withholding typically ranges from 5% to 10% of the full project cost.
How should retainage be recorded?
Record retainage on the balance sheet. The contractor, to whom the retainage is owed, records retainage as an asset. The client, who owes retainage to the contractor, records retainage as a liability.
How is retainage calculated?
The contractor should fill in the percentage and multiply it by the value of work or materials, respectively. So let’s look at a simplified example. Your contract calls for variable retainage: 10% for labor and 5% for materials. The contract price is $100,000 and you’ve completed 25% of the project.
What is AIA form g702?
AIA form G702 is actually titled “Application and Certificate for Payment,” but this is often shortened to just “application.” In AIA billing, the architect (or owner or general contractor, in many cases) gets to approve the amount that is billed. Therefore, the form isn’t technically an invoice.
How to calculate&display retainage on an AIA g-702/g-703?
How to Calculate & Display Retainage on an AIA G-702/G-703. 1 delay holding the retainage until the project is completed, OR. 2 hold the full amount of retainage on the initial billing.
What is retainage on an AIA form?
Also called “retention,” retainage is a percentage of a contract, often 5-10%, that can’t be billed until the entire project is complete and the client has approved the work. Its purpose is to give the client recourse if they aren’t satisfied with the work. The schedule of values on an AIA form is the detail of work that is planned and completed.
What is retention in AIAA billing?
AIA billing standards opens opportunities to work on larger projects and bid on government-funded projects. If you work with forms G702 and G703, there are a few important terms you’ll hear. Also called “retention,” retainage is a percentage of a contract, often 5-10%, that can’t be billed until the