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GolfNut72
Level 4

Work in Progress - General Contractor - Construction

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

 

Solved
Best answer July 12, 2020

Best Answers
Maybelle_S
QuickBooks Team

Work in Progress - General Contractor - Construction

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

  1. Go to the Lists menu, and select Chart of Accounts.
  2. Click the Account button, and then select New.
  3. Select Other Current Asset for the account type.
  4. Click Continue.
  5. 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

  1. Go to the Lists menu, and select Item List.
  2. Change the expense account on your service items to the asset account you set up above.
  3. Add Other Charge items.
  4. Transfer out of WIP as the account and the amount in the description should be positive.
  5. 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:

  1. Go to the Reports menu.
  2. Select Custom Reports and then Summary.
  3. Click the Customize Report tab, then select Filters.
  4. Select the Account drop-down arrow, then choose Multiple accounts.
  5. 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.

  1. Go to the Reports menu.
  2. Select Custom Reports and then Summary.
  3. Click the Customize Report tab, then select Display.
  4. Select the Display columns by drop-down arrow, and then choose Account list.
  5. Click the Display rows by drop-down arrow, and then choose Customer.
  6. Select the Filters tab.
  7. Click the Account drop-down arrow, and then choose your WIP account.
  8. 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.

View solution in original post

17 Comments 17
Maybelle_S
QuickBooks Team

Work in Progress - General Contractor - Construction

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

  1. Go to the Lists menu, and select Chart of Accounts.
  2. Click the Account button, and then select New.
  3. Select Other Current Asset for the account type.
  4. Click Continue.
  5. 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

  1. Go to the Lists menu, and select Item List.
  2. Change the expense account on your service items to the asset account you set up above.
  3. Add Other Charge items.
  4. Transfer out of WIP as the account and the amount in the description should be positive.
  5. 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:

  1. Go to the Reports menu.
  2. Select Custom Reports and then Summary.
  3. Click the Customize Report tab, then select Filters.
  4. Select the Account drop-down arrow, then choose Multiple accounts.
  5. 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.

  1. Go to the Reports menu.
  2. Select Custom Reports and then Summary.
  3. Click the Customize Report tab, then select Display.
  4. Select the Display columns by drop-down arrow, and then choose Account list.
  5. Click the Display rows by drop-down arrow, and then choose Customer.
  6. Select the Filters tab.
  7. Click the Account drop-down arrow, and then choose your WIP account.
  8. 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.

GolfNut72
Level 4

Work in Progress - General Contractor - Construction

Maybelle_S

 

Thank you for the detailed steps.  I will need to take some time to set them up and see how they work.

 

The previous accountant (10 years ago) I think started this but I'm not sure he ever created any reports.  I did find some end of year journal entries in 2008 and 2009 that appear to adjust WIP.

 

I started working with this GC a few years ago but I was helping him get his books updated for his taxes (done by his CPA) and the WIP was never addressed.  Now he wants a clean set of books and I am going back and looking at all of the things that weren't done correctly (both by the accountant and me) and trying to fix them all.

 

I will follow up with those articles you mentioned too.

 

Thanks

EJ

Maybelle_S
QuickBooks Team

Work in Progress - General Contractor - Construction

Thanks for getting back to us, @GolfNut72.

 

We'll wait for your response on how the steps go and look forward to assisting you with any other concerns in the future. Feel welcome to swing by anytime if you have QuickBooks questions. You can always count on us here in the Community to help you every step of the way.

 

Take care and have a lovely day.

barronandmcclary
Level 1

Work in Progress - General Contractor - Construction

Hi,

I followed the instructions to create the WIP report using Job Profitability reports. For some reason Retained Earnings shows up on the report. Retained Earnings is not selected in the account filter and it's jobs from years ago, not in the date range I've selected.

 

Any ideas?

 

Kathe


@Maybelle_S wrote:

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

  1. Go to the Lists menu, and select Chart of Accounts.
  2. Click the Account button, and then select New.
  3. Select Other Current Asset for the account type.
  4. Click Continue.
  5. 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

  1. Go to the Lists menu, and select Item List.
  2. Change the expense account on your service items to the asset account you set up above.
  3. Add Other Charge items.
  4. Transfer out of WIP as the account and the amount in the description should be positive.
  5. 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:

  1. Go to the Reports menu.
  2. Select Custom Reports and then Summary.
  3. Click the Customize Report tab, then select Filters.
  4. Select the Account drop-down arrow, then choose Multiple accounts.
  5. 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.

  1. Go to the Reports menu.
  2. Select Custom Reports and then Summary.
  3. Click the Customize Report tab, then select Display.
  4. Select the Display columns by drop-down arrow, and then choose Account list.
  5. Click the Display rows by drop-down arrow, and then choose Customer.
  6. Select the Filters tab.
  7. Click the Account drop-down arrow, and then choose your WIP account.
  8. 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.


 

katherinejoyceO
QuickBooks Team

Work in Progress - General Contractor - Construction

Thanks for joining this conversation, @barronandmcclary

 

I appreciate you for following the steps shared by my peer to create the WIP report using the Job Profitability report.

 

Let's ensure that it is set to All income/expense accounts so the retained earnings won't show in the report. 

 

See the illustrations below: 

 

WIP.pngwip2.png

 

For future reference, read through this article: Understand reports in QuickBooks Desktop. It covers all the basic information about reports and helps you learn about how QuickBooks generates reports. 

 

Feel free to message us again here in the Community in case you'll have additional questions. I'm always around here to help. 

Fiat Lux - ASIA
Level 15

Work in Progress - General Contractor - Construction

@barronandmcclary 

As another option, consider having a construction management app to integrate with your QB Desktop. WIP is a figure generally used to show progress and “Earned Revenue” on a project that is mid-stream. May notice this number in the profitability charts of your Contract Jobs. The app uses this number to show you how far along you are on a project and how much of the contract value you’ve earned on a project before you’ve invoiced the client.

 

In order to get a WIP value to show on your project, you will need two things:

1. A Fixed Price Contract – This is necessary so it can show a % of a whole fixed number. 
2. A Budget Cost – It uses the budget to track how far along the actual cost is vs. how high you expect it to be.

 

Both of these values are used in the WIP calculation, which is as follows:

The Actual Cost divided by Budget Cost represents Percentage of Completion, so you can see how far along you are. Then it uses that value times the Contract Value shows the percentage of the contract you should be invoicing based on how much of your budget has been spent. Then, revenue that has already been billed is subtracted, so it doesn’t double up your revenue. A Negative WIP value shows that you have billed the client MORE than the % of Completion times the Contract Value.

 

BuilderInPoway
Level 1

Work in Progress - General Contractor - Construction

Hi there.  Does the online version of Quickbooks have a WIP solution?  Just setting up books for the first time in QB and need to be able to report WIP to accountants.

 

Any help would be appreciated.

 

Thanks!

KlentB
Moderator

Work in Progress - General Contractor - Construction

Thanks for checking out the Community space, BuilderInPoway.

 

Unfortunately, a WIP feature is unavailable in QuickBooks Online. We're unable to track the manufactured products or materials as they flow on the production floor. 

 

Please know there are plenty of third-party applications that can integrate and provide additional services to your QuickBooks account. You'll want to consider visiting our QuickBooks App Center to find an app that allows work-in-progress (WIP) tracking. You may also follow these steps in searching it:
 

  1. Login to qbo.intuit.com
  2. Select Apps from the sidebar menu.
  3. Go to the Find Apps tab.
  4. Enter "WIP" in the search bar or click the Browse category button to filter the results.

Additionally, here's an article that you can read to learn more about the inventory management capabilities of QuickBooks Online.

 

Since you've mentioned that it's your first time using QBO, I also encourage visiting our Getting Started page to be guided in setting up your business.

 

If I can be of any other help, please don't hesitate to tag my name below. I'll be more than happy to help you out again.

Fiat Lux - ASIA
Level 15

Work in Progress - General Contractor - Construction

@BuilderInPoway 

You may need a 3rd party app as I mentioned earlier.

CJohn125
Level 1

Work in Progress - General Contractor - Construction

What is a good 3rd party app that works with QB desktop for the WIP process?

Fiat Lux - ASIA
Level 15

Work in Progress - General Contractor - Construction

...

TLD5
Level 1

Work in Progress - General Contractor - Construction

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 

ReymondO
QuickBooks Team

Work in Progress - General Contractor - Construction

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.

Thilmony
Level 1

Work in Progress - General Contractor - Construction

Can someone give instructions like Maybelle gave, only for QBO?  I am using the Plus version.

SarahannC
Moderator

Work in Progress - General Contractor - Construction

Hello! I'm here to help you create an account called Work in Progress in QuickBooks Online, similar to the instructions provided by Maybelle in the previous post, Thilmony.
 

Here are the steps to create an account:

 

  1. Go to the Accounting menu.
  2. Within the Chart of Accounts tab, Click on the New button to create a new account. 
  3. Select the appropriate account type for Work in Progress (e.g., Asset, Expense, or Other Current Asset). Consider consulting your account on this matter.
  4. Provide a unique account name, such as "Work in Progress" or any other name that suits your needs.
  5. Click on Save.


Then, here are the steps to apply or change the account for an item:

 

  1. Go to the Sales menu.
  2. In the Product and services tab, find the item you want to manage. Then, click Edit under the Action column.
  3. In the Account field, select the account you created above.

 

If you want to run the Project profitability report or you'll need to turn on the Project feature in QBO. I recommend this article for more details: Set up and manage projects in QuickBooks Online Plus.

 

However, since the Work in Progress (WIP) feature is not available in QuickBooks Online. You can explore third-party applications that integrate with QuickBooks and offer additional services to help you achieve your desired functionality.

 

If your goal is different from the information provided in this thread, please let me know so that I can offer more detailed and accurate guidance tailored to your specific goal. Bye for now and take care always.

Thilmony
Level 1

Work in Progress - General Contractor - Construction

      Hi.  Our business is flipping homes.  The reason I want to use a WIP account is so my balance sheet stays accurate.  I set up an account named Work in Progress, with the account type being other current asset.  It has to be an asset and not an expense.  For example, If I buy a house for 100k, and put 50k into it, I want that 150k to show up on my balance sheet as an asset, since I own it and will recover it when I sell the property.  The problem I am having is with the reporting.  I cannot get the projects function to work, as it deals with income and expenses.  My WIP entries will not show up there since they are assets and not expenses.  Maybe I don't have something set up right.

     I have attached an article that shows a work around for this problem using QBDT.  I understand the article, I would just like to do what the article says in QBO Plus.  The terminology is different, and the reporting functions in QBO are not the same.  Can you help me do everything this article is discussing?  Thanks for your time.

 

KayePe
QuickBooks Team

Work in Progress - General Contractor - Construction

Hi @Thilmony,

 

I am happy that you provided us with some information regarding your concern.

 

As of now, we're unable to add the assets to the projects. As a workaround, I recommend integrating a third-party app that allows work-in-progress (WIP) tracking. I'll show you how.

 

Step 1: Find the App

1. Sign in to your QuickBooks Online account.

2. On the left navigation menu, select the Apps tab.

3. In the magnifying glass bar, search the app you want to connect to or click the Browse category.

 

Step 2: Download an app

1. Choose the app that you want to download.

2. Click the Get App Now

  • The button will display Opt-in Now if the app is in beta testing.
  • The button will display Learn More if the app requires you to connect the app to their system.

3. To connect to your QuickBooks Online, you need to authorize the app.

4. In connecting and setting up the settings of your choice, kindly follow the remaining steps.

 

In managing your third-party app connections, you can check it in the My Apps tab.

 

Then, I suggest using a journal entry to enter the assets manually and the transactions made for the particular property. To avoid messing up your books, I recommend reaching out to your accountant.

 

These are the steps in creating a journal entry:

  1. Go to +New and then select Journal Entry.
  2. On the first line, select an account from the Account field. Depending on if you need to debit or credit the account, enter the amount in the correct column.
  3. On the next line, select the other account you're moving money to or from. Depending on if you entered a debit or credit on the first line, enter the same amount in the opposite column.
  4. Check the amounts - you should have the same amount in the Credit column on one line and the Debit column on the other.
  5. Once done, click Save and close.

Additionally, QuickBooks Online allows you to track your journal entries accurately in QuickBooks Online. To do so, you can delete the transactions added by mistake or update them if necessary. 

 

If I can be of any other help in managing your QuickBooks transactions, you can always tag my name below. I'll be more than happy to assist.

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