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Work in Progress - General Contractor - Construction

Forum|Forum|5 years ago
July 12, 2020
2 replies
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I'm looking for articles, white papers, guidance, best practices for managing Work in Progress for a General Contractor. For the past several years he was been coding a lot of expenses and payments to WIP but it is never closed out. It looks like I will have to go back several years and closeout completed jobs and make sure at year-end jobs are correctly progressed (to the best of our ability).

The GC is using QBDT 2019 Pro.

Any information would be helpful

Thank you

EJ

QuickBooks Desktop

Best answer by Maybelle_S

Thanks for reaching out to the Community space, @GolfNut72.

Currently, we don't have a WIP feature in QuickBooks Desktop (QBDT). However, we can create an account called Work in Progress. This way, we can track the revenue (as liabilities) and costs (as assets) until the end of the job. Here's how:

Step 1: Create an account

Go to the Lists menu, and select Chart of Accounts.
Click the Account button, and then select New.
Select Other Current Asset for the account type.
Click Continue.
For the Account Name, you can put Work in Progress.

I'd also recommend reaching out to an accountant to help you choose the right account.

Step 2: Change the item account

Go to the Lists menu, and select Item List.
Change the expense account on your service items to the asset account you set up above.
Add Other Charge items.
Transfer out of WIP as the account and the amount in the description should be positive.
Make sure to use the Items tab instead of the Expenses on all your transactions.

However, if you use Job Profitability reports, we can filter them to include your WIP account. I'll guide you how:

Go to the Reports menu.
Select Custom Reports and then Summary.
Click the Customize Report tab, then select Filters.
Select the Account drop-down arrow, then choose Multiple accounts.
Verify all income and expense accounts and your WIP account, then click on OK twice.

Once done, generate a report to track the amount in WIP by the job.

Go to the Reports menu.
Select Custom Reports and then Summary.
Click the Customize Report tab, then select Display.
Select the Display columns by drop-down arrow, and then choose Account list.
Click the Display rows by drop-down arrow, and then choose Customer.
Select the Filters tab.
Click the Account drop-down arrow, and then choose your WIP account.
Click OK once done.

When the projects complete, make the invoice or sales receipt for the sales price. Then, add the two charged items to ensure a negative amount for Transfer into COS. The invoice end total must match the sales price.

I've also added these articles about customizing reports and job costing:

Feel free to drop a comment below if you have other questions. I'm always here to help you some more.

M

Maybelle_S

Answer

QuickBooks Team

Thanks for reaching out to the Community space, @GolfNut72.

Currently, we don't have a WIP feature in QuickBooks Desktop (QBDT). However, we can create an account called Work in Progress. This way, we can track the revenue (as liabilities) and costs (as assets) until the end of the job. Here's how:

Step 1: Create an account

Go to the Lists menu, and select Chart of Accounts.
Click the Account button, and then select New.
Select Other Current Asset for the account type.
Click Continue.
For the Account Name, you can put Work in Progress.

I'd also recommend reaching out to an accountant to help you choose the right account.

Step 2: Change the item account

Go to the Lists menu, and select Item List.
Change the expense account on your service items to the asset account you set up above.
Add Other Charge items.
Transfer out of WIP as the account and the amount in the description should be positive.
Make sure to use the Items tab instead of the Expenses on all your transactions.

However, if you use Job Profitability reports, we can filter them to include your WIP account. I'll guide you how:

Go to the Reports menu.
Select Custom Reports and then Summary.
Click the Customize Report tab, then select Filters.
Select the Account drop-down arrow, then choose Multiple accounts.
Verify all income and expense accounts and your WIP account, then click on OK twice.

Once done, generate a report to track the amount in WIP by the job.

Go to the Reports menu.
Select Custom Reports and then Summary.
Click the Customize Report tab, then select Display.
Select the Display columns by drop-down arrow, and then choose Account list.
Click the Display rows by drop-down arrow, and then choose Customer.
Select the Filters tab.
Click the Account drop-down arrow, and then choose your WIP account.
Click OK once done.

When the projects complete, make the invoice or sales receipt for the sales price. Then, add the two charged items to ensure a negative amount for Transfer into COS. The invoice end total must match the sales price.

I've also added these articles about customizing reports and job costing:

Feel free to drop a comment below if you have other questions. I'm always here to help you some more.

T

TLD5

Maybelle,

You talked about

When the projects complete, make the invoice or sales receipt for the sales price. Then, add the two charged items to ensure a negative amount for Transfer into COS. The invoice end total must match the sales price.
what charged items are you referring to? The invoice and sales receipt?
And i am transferring from the WIP account to COGS correct. ?

thank you

Lisa

R

ReymondO

Moderator

Good day, @TLD5.

Let me join in this conversation and answer queries about setting up the work in progress.

The charge items my colleague Maybelle is referring to is the item was set up in step number two. Depending on how want to record the transaction, you can use an invoice or sales receipt.

Moreover, you'll have to use the Work in Progress account that was created in steps number one to track the Other Charge item.

Additionally, you can check out our Year-End Guide for QuickBooks Desktop. This will provide you with some info on what you'll need to do when closing your books and preparing for the new one.

Let me know if you need further assistance with this. I'm always around to provide answers and clarifications to your questions. Have a great day ahead and take care.

W

WIPReports

For anyone landing here looking for QBO specifically (which several people in this thread asked about): QBO does not have a native WIP report.

The QBO approach that gets you closest:

1. Create sub-customers for each job (under a parent customer for each GC/owner)
2. Tag every bill, expense, and invoice to the correct sub-customer
3. Run "Profit and Loss by Customer" for job cost visibility

But that only gives you costs and billings. For a real WIP schedule you also need contract value and cost-to-complete estimates, neither of which QBO tracks. Most firms end up maintaining an Excel spreadsheet alongside QBO, pulling numbers manually each month.

For home flipping with QBO Plus: WIP should be on the balance sheet as an asset until sale. In QBO, create an Other Current Asset account called "WIP" or "Construction in Progress." Post acquisition costs and rehab expenses there via journal entries. When you sell, JE the accumulated costs from WIP to COGS. Your WIP schedule (showing each property's status) will need to be maintained outside QBO.

I built a tool that automates the QBO-to-WIP schedule pipeline for construction companies (wipreports.com). It connects to QBO, collects cost-to-complete from your PMs via email, and generates a professional WIP PDF. First month free.

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