IntermediateTECHNICAL
Walk me through the journal entries and month-end adjustments you would perform to correct a misallocated subcontractor expense discovered after month close.
Project Accountant
General

Sample Answer

Recently I found a $52,400 subcontractor charge posted to Project A instead of Project B five days after close. First I validated source documents and confirmed invoice date and PO. I posted a reversing entry in the current period: debit Subcontract Expense—Project A $52,400 and credit Accounts Payable $52,400 to clear the mischarge, then rebooked: debit Subcontract Expense—Project B $52,400 and credit Accounts Payable $52,400. If billing to client was already done, I adjusted WIP and created a contra billing entry or credit memo for the overbilled amount, which reduced billed revenue by $52,400 and corrected margin reporting. I documented rationale, attached approvals from PM and procurement, and ran a GL variance report to ensure P&L and job-cost were aligned for the month. I completed this within 48 hours to avoid audit flags.

Keywords

Validate source docs and approvals before adjustingReverse original posting and rebook to correct projectAdjust WIP/client billing if revenue was affected and document approvalsComplete adjustments quickly (e.g., within 48 hours) and reconcile GL