Yes, underbillings result in more revenue and assets. But you have to make sure they're reasonable. Otherwise, they're a ticking time bomb. It's important to understand the mechanics of underbillings before you record what the WIP says. It's not free money. It's a placeholder until your billings catch up. Make sure there will be enough revenue to absorb the reversal in the following year or period. Example time! Assume the following facts: Year 2025: Total Contract Amount: $6,800,000 Total...

There's generally confusion about which estimates to use when building a work in progress schedule. It's 12/31/2025; do you use estimates from the time you bid the job, the estimates at the time of the balance sheet date, or where the estimates currently stand? So, do you use estimates as of 9/24/25 when you bid the job, estimates at 12/31/25, or the estimates as of 2/15/26, on your 12/31/25 work in progress (WIP) report? The answer everyone is looking for is... it depends. However, as a...

If you haven't read the lesson on retainage receivable, it might help do so before proceeding (https://www.thewipreport.com/post/revenue-accounts-receivable-and-retainage-receivable). This sample pay app is based on the example in the previous lesson. Pay APP #1: AA: Total billings to date of $100,000 should be reflected in the revenue account BB: 5% of the total billings, or $5,000 should be recorded to retainage receivable CC: Total billings less $5,000, or $95,000 should be recorded to...