The capital projects fund of Hood River completed construction of an addition to its city hall at a cost of $4,000,000. The city council approved payment of the amount due the general contractor, less a 10 percent retainage. How should the capital projects fund account for the 10 percent retainage?

I. As a credit of $400,000 to Deferred Revenue-Retained Percentage II. As a credit for $400,000 to Contracts Payable-Retained Percentage.

A. I only B. II only C. Either I or II D. Neither I nor II