Defining Retainage for a Contract

Retainage is a percentage of the invoice amount that your company is paid after the work is complete. During the Create A/R Entries process, the system creates a separate accounting entry for the retainage amount. You define retainage for a contract by providing:

• The retainage rule, which is used to determine the percentage of the billing amount that will be retained, or held back, until the work is complete.

• The offset account that is defined in the RCRETN AAI, which the system uses to create offsetting entries during the Create A/R Entries process.

  The system uses this hierarchy to determine the business unit for the retainage account:

  1. The system retrieves the RCRETN AAI by company and uses the business unit, object, and subsidiary that are specified for this AAI.

  2. If the RCRETN AAI has a blank business unit, the system uses the host business unit for the RCRETN retainage account.

  3. If no host business unit appears on the contract master record, the system uses the project number on the contract billing line for the retainage entry.

• The control flag, which determines whether the retainage amount should be stored in the JD Edwards EnterpriseOne Accounts Receivable or General Accounting system.

  It also determines whether tax should be calculated on the total taxable amount, including retainage, or the tax calculation on retainage should be deferred until the retainage amount for the contract is released.

• The deferred account that is defined in the RTVATD AAI, which the system uses to create the entry for deferred taxes during Create A/R Entries.