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Level 3

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

 

3 Comments 3
Highlighted
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.

Highlighted
Level 3

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

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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.

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