A contract holds a $30,000 warranty reserve. After correction of accepted items, 80 percent of the reserve is released. What amount remains reserved?
Correct Answer
B) $6,000
Released reserve is $30,000 x 80% = $24,000, so remaining reserve is $30,000 - $24,000 = $6,000. Other choices use 40%, report released amount, or leave the full reserve.
Why This Is the Correct Answer
Released reserve is $30,000 x 80% = $24,000, so remaining reserve is $30,000 - $24,000 = $6,000. Other choices use 40%, report released amount, or leave the full reserve.
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