Tracking Work in Progress For Unbilled Activity Slips

Tracking Work in Progress For Unbilled Activity Slips

Background
Create Accounts
Print Reports
Create Journal Entry
Reverse the Journal Entry

Background

There will often be times when you have entered activity slips for work you've performed for your clients, for which you have not yet billed them at the end of the month. In an accrual accounting system, you have earned income when the task is performed or the goods are delivered, even if you have not billed your client or received payment.

You will need to go through a few different steps to be able to track this.

Create Accounts

Create two new accounts in your accounts list: an income account called "Work in Progress - Income" and an asset account called "Work in Progress - Accrued"

To do this:

  1. Go to the Accounts module
  2. Click on the Accounts List button
  3. Click on the New button
  4. Set the Account as a Detail Account
  5. Set the Account Type as Income
  6. Type in an Account Number that hasn't been used and hit tab
  7. Type in the Account Name Work in Progress - Income
  8. Hit okay.
  9. Click on the New button
  10. Set the Account as a Detail Account
  11. Set the Account Type as Other ASset
  12. Type in an Account Number that hasn't been used and hit tab
  13. Type in the Account Name Work in Progress - Accrued
  14. Hit okay

Print Reports

At the end of every month, print an Activity Slip [Activity Summary] Report.

To do this:

  1. Go to Reports from the menu bar at the top of the screen
  2. Click on Index to Reports from the dropdown menu
  3. Click on the Time Billing tab
  4. Select the Activity Slip summary report and hit Customize
  5. Using report customizations, be sure to include all activities on the report and enter the dates of the first and last day of the current month in the 'Dated From' and 'Date To' fields.
  6. Print the report with this information, the total in the Balance $ column is your month-end Work in Progress amount.

Create Journal Entry

Create a general journal entry to enter the value of this month's work in progress in your books:

  1. Go to the Accounts module
  2. Click on the Record Journal Entry Button
  3. Enter the date of the last day of the current month in the Date field
  4. Enter the month-end work in progress amount from the report you printed in step 2 as a credit to the Work in Progress - Income account
  5. On the next line, balance the transaction by entering the same amount as a debit to the Work in Progress - Accrued account
  6. Click record

This entry increases your income on your profit & loss statement and increases the value of your assets on your balance sheet to reflect the month-end value of your work in progress.

Hint: Save the WIP general journal entry as a recurring transaction by clicking on the action button from the bottom left of the journal entry screen - that way you can use this each month.

Reverse the Journal Entry

At the beginning of the next month:

  1. Go to Setup from the menu bar at the top of the screen
  2. Choose Preferences from the drop down menu
  3. Click the Security tab
  4. Make sure there is a check mark in the box that reads Transactions CAN'T be Changed, They Must be Reversed [System-Wide]. Click OK.
  5. Go to the Accounts module
  6. Click on the Transaction Journal button
  7. Click on the arrow next to the month-end journal entry
  8. Select Edit from the menu bar at the top of the screen
  9. Choose Reverse General Journal Entry from the drop down menu
  10. Enter the date of the first day of the current month in the Date field
  11. Click Record
  12. If you would like to turn of the preference to make it so that you can change transactions - go back to Setup > Preferences from the menu bar at the top of the screen and click on the Security tab. Uncheck the first box.