Work In Progress

Options
PGM
PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
I'm setting up a new chart of accounts and considering different ways of handling WIP.

Currently its posted into the balance sheet section of the accounts, which might sound odd! But it works, as costs come in and revenue is recognised, its transfered to the P&L. Leaving in the balance sheet the WIP, or as in traditional AAT examples, the closing stock.

Seems to work ok, but would it be better done another way? Does anybody do similar to this or with WIP?

thanks!

Comments

  • PAMDILL
    PAMDILL Registered Posts: 721 Epic contributor 🐘
    Options
    PGM wrote: »
    I'm setting up a new chart of accounts and considering different ways of handling WIP.

    Currently its posted into the balance sheet section of the accounts, which might sound odd! But it works, as costs come in and revenue is recognised, its transfered to the P&L. Leaving in the balance sheet the WIP, or as in traditional AAT examples, the closing stock.

    Seems to work ok, but would it be better done another way? Does anybody do similar to this or with WIP?

    thanks!
    In each of the companies I have worked for, we just had it in same places as Opening and Closing Stock, next number down in ledgers.

    Had a P&L account and BS accounts, Stock and WIP shown together in accounts.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    Options
    WIP in the BS is not odd, it's quite correct!

    Cr Sales, Dr WIP for work done at the month end that's not yet been billed.

    Cr WIP Dr Sales once the invoice has been raised (which will Cr Sales and Dr Debtors).

    This is what we do - keeps our sales figures accurate and we can see how long some work is hanging around for before we can invoice it!

    I wouldn't personally show it as opening and closing WIP (as per standard stock COS), unless you really wanted to see the movements on the accounts month on month. The above journals do the job and keep it simple.
Privacy Policy