Construction
Retention Bond (In Lieu of Cash Retention)
Recording a bank guarantee provided to the client instead of withholding cash retention.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Bank Charges (Bond Fee) | Expense (+) | 2,000.00 | - |
| Accounts Receivable (Full, No Retention Held) | Asset (+) | 100,000.00 | - |
| Cash in Bank | Asset (-) | - | 2,000.00 |
💡 Accountant's Note
Some contractors offer a bank guarantee ('retention bond') so the client holds no cash retention. The contractor receives full payment but pays a bank fee for the bond. This improves cash flow significantly.
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