A pay application includes $120,000 of approved stored material subject to 10 percent retainage. What net stored-material payment is included before previous-payment adjustments?
Correct Answer
B) $108,000
Retainage is $120,000 x 10% = $12,000, so net stored-material payment is $120,000 - $12,000 = $108,000. Other choices report retainage only, use an unsupported amount, or add retainage.
Why This Is the Correct Answer
Retainage is $120,000 x 10% = $12,000, so net stored-material payment is $120,000 - $12,000 = $108,000. Other choices report retainage only, use an unsupported amount, or add retainage.
Why the Other Options Are Wrong
Option A: $12,000
stored material retainage, choice a: $12,000 is only the retainage withheld, not the net payment.
Option C: $110,000
stored material retainage, choice c: $110,000 uses the wrong retainage base or stops before netting retainage; the.
Option D: $132,000
stored material retainage, choice d: $132,000 uses the wrong retainage base or stops before netting retainage; the.
Memory Technique
Picture a index tab labeled stored material retainage: finish every operation before accepting $108,000.
Reference Hint
Open NASCLA Contractors Guide to Business, Law and Project Management, 14th Ed.; use the index entry or section for "Stored material retainage" to confirm that Retainage is $120,000 x 10% = $12,000, so net stored-material payment is $120,000 - $12,000 = $108,000.
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