The following information relates to Contract 6502, which was undertaken for the construction of roadways for the City Council. The total value of the contract was $250,000 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 85,349

Labour engaged on site 74,375

Plant installed at cost 15,000

Direct expenditure 4,136

General overhead charges 3,167

Materials returned to store 549

Work certified 195,000

Cost of work not certified 4,500

Materials on hand, December 31 1,883

Wages accrued on December 31 2,400

Direct expenditure accrued on Dec 31 240

Value of plant December 31 11,000

Cash received on account amount 180,000

Required:

1. Prepare the Contract Account as at December 31, 2019.
2. Prepare the Contract P&L account for the year ended December 31, 2019.
3. Prepare the Contractee Account as at December 31, 2019.
4. Explain the term retention money.