An allowance is $3,200. The owner selects fixtures costing $2,750, and the contract says no markup applies to credits. What should be documented?
Correct Answer
A) $450 credit.
The selected fixtures are $450 below the allowance, so the contract should document a $450 credit.
Why This Is the Correct Answer
The selected fixtures are $450 below the allowance, so the contract should document a $450 credit.
Why the Other Options Are Wrong
Option B: $450 increase.
$450 increase. is not aligned with the supported result for allowance reconciliation; it has the wrong label or classification even if the number looks close.
Option C: $2,750 credit.
$2,750 credit. is above the supported result for allowance reconciliation; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $5,950 increase.
$5,950 increase. is above the supported result for allowance reconciliation; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Allowance Reconciliation drawer for Reconciling Fixture: label fixtures before counting dollars.
Reference Hint
Study anchor (closed-book): memorize Allowance reconciliation from CSLB 2026 Law Book; CSLB Home Improvement Contracts / B&P Code Section 7159 home improvement contract requirements; know the rule or calculation trigger without relying on exam-room lookup.
More Law & Business Questions
A Fresno homeowner wants a $725 cabinet repair and trim adjustment. Which contract step best matches CA home improvement requirements?
A project has $6,500 retainage withheld. The owner releases 60 percent of retainage at substantial completion. How much cash is released?
Cash is $52,500 and monthly burn is $17,500. How many months of runway are available?
A supplier offers 1.5 percent early-pay discount on a $22,000 invoice. What is the discount?
A balance sheet lists assets of $310,000 and liabilities of $185,000. What is owner's equity?
A job is estimated to cost $135,000. What price gives a 25 percent gross margin?
A customer invoice of $4,000 has a stated late charge of 1.5 percent. What late charge is added?
A bid has direct labor of $18,000, materials of $12,500, and equipment rental of $3,500. If the contractor adds 20 percent markup on direct cost, what is the bid price?
A contractor wants a 25 percent gross margin on a job with estimated cost of $60,000. What selling price gives that margin?
A completed project sold for $150,000 and had total cost of $126,000. What gross margin percentage did the project earn?