The following information relates to Contract 2501, which was undertaken for the construction of roadways for the Portmore Municipality.

The total value of the contract was $1,500,000 and it is at a stage where profits can be attributed to it. Details of the contract are shown in the books:

$

Materials sent to site 1,085,349

Labour engaged on site 174,000

Plant installed at cost 150,000

Direct expenditure 40,000

General overhead charges 3,160

Materials returned to store 5,490

Work certified 1,400,000

Cost of work not certified 60,500

Materials on hand, December 31 1,883

Wages accrued on December 31 2,400

Direct expenditure accrued on Dec 31 24,000

Value of plant December 31 20,000

Cash received on account amount 1,200,000

Required:

a). Prepare the Contract Account as at December 31, 2020.

b). Prepare the Contract P&L account for the year ended December 31, 2020.

c). Prepare the Contractee Account as at December 31, 2020.

d). Explain the term 'retention money.'