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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

9 Comments
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

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.png wip2.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
QuickBooks Team

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.

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