Job Costing - WIP Processing
Overview – Work in Process (WIP)
Work in process (WIP) adjustments should be done every month for jobs that are set up as billings and cost type jobs. When you post a WIP adjustment the system generates both the accrual and the accrual reversal transactions. The accrual is posted in the current period and the reversal posted to the first day of the next accounting period.
Overrides for a contract in WIP from the prior month will be displayed in the WIP form at the bottom of the display. If the override is still required, double-click the amount and it will be copied to the contract and the subsequent values adjusted.
When defining a job, there is a checkbox setting in the job (and job control that defaults into new Job Entry screens) that will detail if the sub-jobs are included (rolled into) or excluded from the master control job when working with WIP. This field is controlled and only available in master jobs (with control job code = “All”).
The work in process forecast and reporting functions in Enterprise are available through two primary options:
-
The WIP Adjustment screen allows users to review the current state of jobs, create and post WIP adjustment transactions, and store long-term revenue forecasts.
-
The WIP Report presents job statistics as of the end of the specified period.
WIP adjustment amounts are always calculated on the complete job, they do not consider the adjustment amount from last month as last month’s adjustment was reversed for the current month.
The following illustrates how the WIP adjustment is calculated in the case of an under billing and an over billing.
Example 1: Under billing
If the result is positive (the amount billed is less than the amount spent on the job), the accumulated costs adjustment account will be debited and the accumulated billings account will be credited. (The specific G/L accounts used for these transactions were entered on the Enter Job screen.)
Contract: | 1,000,000 | ||
Projected Final: | 800,000 | ||
% Complete: | 25% | ||
Billed: | 150,000 | ||
25% (Percent Complete) x 1,000,000 (Contract) = 250,000 (Earned To Date) | |||
250,000 (Earned To Date) - 150,000 (Billed To Date) = 100,000 (WIP Adjustment) | |||
|
|||
|
Example 2: Over billing
If the result is negative (the amount billed is more than the amount spent on the job), the revenue account will be debited and the unearned revenue account will be credited. (The specific General Ledger accounts used for these transactions were entered on the Enter Job screen.)
Contract: | 1,000,000 | ||
Projected Final: | 800,000 | ||
% Complete: | 25% | ||
Billed: | 400,000 | ||
25% (Percent Complete) x 1,000,000 (Contract) = 250,000 (Earned To Date) | |||
250,000 (Earned To Date) - 400,000 (Billed To Date) = -150,000 (WIP Adjustment) | |||
|
|||
|