Retainage Receivable
Definition: Amounts withheld pending project completion
Scope:NarrowDifficulty:Moderate
Amounts withheld pending project completion
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Bill less 10% retainage | ||
| $100,000 work; owner withholds $10,000. | ||
| Accounts ReceivableAsset+ | $90,000 | |
| Retainage ReceivableAsset+ | $10,000 | |
| Construction RevenueRevenue+ | $100,000 | |
| Full revenue recognized; retainage collected after completion. | ||
| 2. Collect retainage | ||
| Project accepted; owner releases $10,000. | ||
| CashAsset+ | $10,000 | |
| Retainage ReceivableAsset− | $10,000 | |
| Retainage collected. Typical in construction (5–10%). | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
Accounts ReceivableAsset account — amounts owed by customers. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$90,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$90,000.00
Retainage ReceivableRetainage ReceivableAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$10,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$10,000.00
$0.00
Construction RevenueConstruction RevenueRevenueIncome earned from business operations. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$100,000.00
Normal bal. ▶
$100,000.00
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$10,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$10,000.00
DurationShort & Long-Term
Related Subjects
Related
- Unbilled ReceivablesBoth represent earned revenue not yet fully collected
- Accounts ReceivableRetainage is billed but withheld; A/R is billed and collectible
- Trade ReceivablesRetainage arises from construction trade transactions
Contrast
- Non-Trade ReceivablesRetainage is from core operations, unlike non-trade items
External Links
- Retainage — Wikipedia