Sample Contractor WIP practice exercise

All company, job, and financial data in this practice case is fictional.
CY means current year. PY means prior year. Use the labels 20CY and 20PY as period placeholders.

Open files 01–06 for your source information. Save a working copy of file 07, the blank Levvigo WIP Schedule Template, and prepare the WIP at 5/31/20CY.

Use accrual-basis information. All direct job costs are assigned to the eight jobs. There are no indirect job costs, retainage, contract losses, or special uninstalled-material adjustments in this exercise. Administrative expenses remain outside the job costs.

The contract values and estimated total costs in file 06 are current and include approved changes. Jobs J101–J103 began in 20PY. Jobs J103 and J106 are complete by 5/31/20CY. All other listed jobs are in progress.

The current general-ledger balances before the 5/31/20CY WIP adjustment are $20,000 of Underbillings and $20,000 of Overbillings. These existing balances are the starting point, regardless of when they were booked. Compare them with the current WIP's required ending balances and book only the difference. WIP entries should not be reversed.

Your tasks:
1. Reconcile current-year billings and direct job costs between the customer report and the company P&L.
2. Carry forward the cumulative prior-year costs, earned revenue, and billings from file 05.
3. Prepare the WIP using the current contract and cost estimates in file 06.
4. Calculate the entry required to adjust the existing WIP balance-sheet accounts to the required ending balances. Use Revenue - WIP adj. for the revenue offset.
5. Tie current-year WIP revenue and costs to the adjusted P&L. Tie underbillings and overbillings to the adjusted balance sheet.

Prepare the fictional entry in Excel. Do not post fictional transactions into your company's real QuickBooks account.

The separate answer key contains files 08–11. Try the exercise before opening those files.

The template's Contracts in Progress and Completed Contracts tabs use FILTER. Use Microsoft 365 or Excel 2021 or later with FILTER support. The QBO-format sample reports keep the source report's fonts, number formats, row heights, column widths, and subtotal styles. Requested content has been simplified and fictionalized.
