Construction
Liquidated Damages Paid to Client (Delay)
Recording the penalty paid to the client for failing to achieve practical completion by the contractual date.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Liquidated Damages Expense | Expense (+) | 60,000.00 | - |
| Accounts Receivable (Deducted from Billing) | Asset (-) | - | 60,000.00 |
💡 Accountant's Note
Liquidated damages (LDs) are usually deducted by the client from outstanding progress payments. They are a direct project cost — never capitalized — and reduce the project's overall profitability.
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