Contracting Work in Process:
1. Set up a Work in Process account of type Other Current Asset and set up a sub-account for the current project:
1. Select the Lists menu and select Chart of Accounts. The Chart of Accounts window opens.
2. Select the Other Account Types option, and then click the drop-down arrow and select Other Current Asset from the list. Click Continue.
3. Enter the information for the WIP account and click Save & New.
4. Enter sub-account information for the current project. Select the Sub-account of check box and select the WIP account from the list.
2. Enter the Money Out transactions (Checks, Bills, Credit Card Charges, and Paychecks) and record them as Debits to the WIP:Project account. Continue to accumulate charges to the WIP account until the project is completed.
3. When the project is complete, create an Invoice to record the sale of the project:
1. Select the Customers menu and select Create Invoices. The Create Invoices Window opens.
2. Click the Customer: Job drop-down arrow and select the appropriate customer name.
3. Enter the expenses associated with the project and select Save & Close.
4. Enter a journal entry crediting the WIP account and debiting a Cost of Goods Sold (COGS) account.
1. Select the Company menu and select Make General Journal Entries. The Make General Journal Entries window opens.
2. Create a journal entry crediting the WIP: Project account for the expenses associated with the project and an entry and debiting the COGS account for the same amount.
You have contracted to do the landscaping for a new, 5-home subdivision. The developer will pay you for your work when all your work is done.
1. Set up a new WIP sub-account and a new COGS sub-account for the new job.
2. Create a new Customer for this project.
3. Set up a new Payroll Item pointing to the new WIP sub-account.
4. Purchase materials and enter a Check, using the new sub-account and the new Customer.
5. Enter your payroll using the new payroll item to record time spent on the new job. The new item will add charges to the new WIP sub-account.
6. Invoice the developer for the time and expenses used on the job.
7. Enter a Journal Entry to credit the new WIP sub-account for its balance and debit that amount to the new COGS sub-account.
When you have entered all of the charges, the Invoice and the Journal Entry, then your P&L will show the revenue from the job and all of the expenses related to the job in the same accounting period.
Note: When you use CWIP, the Job Profitability Summary and the Job Profitability Detail reports will not include the charges until you remove the Accounts = All Income and Expense filter.
Note: Be aware that you cannot create a balance sheet budgets either by customer:job or by class. To compare your estimated costs with actual costs, you have two options:
Set up your construction projects as customer:jobs, enter estimates and run Estimate vs Actual reports.
Enter your cash out transactions to expense accounts and journal unearned expenses to WIP and journal earned expenses into COGS. Then you can set up a P&L Budget by Class or Customer and run Budget vs Actual reports.