Accounting problem help

Posted on 2013-11-22 12:46:00 in Accounting by ROSE LENTZ

The city of Watersville approved the construction of an enclosed concert arena for a total cost of 75,000,000 in order to attract professional events. On the same day, a contract with a 6 percent retainage clause was signed with V.P. Construction company for the arena. The arena will be financed by a 75,000,000 general obligation bond issue. Investment revenue of 4,000,000 was also included in the budget. (Assume that the budget is recorded in the accounts and encumbrance accounting is used)



I came up with



Approval of construction of concert area $7,500,000

6% retainage clause V.P. Construction Company $4,500,000

Investment revenue $4,000,000

$66,500,000



I am not sure how to even really work this but this is what I came up with

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