Chart of accounts for a construction company

Hi,
I am creating chart of accounts for a construction company which buys lands, make building then sell them as apartments, I have the below transactions and questions about them which simplify our scenarios. Could you provide me with answers?
1- Owner decided to invest 3 Million $ in his construction company. To record this this transaction, he debits the cash in bank account by $3,000000 and credits his equity account by the same amount.
2- The owner bought a land, it costs 1 million$. To record this, he credited the cash in bank account by $1,000000 and debited the cost account that designed to record lands. Can we make this cost account COGS?
3- He paid $1,00000 to complete the first stage of the construction process which is digging, paving and fencing. To record this, he debited the asset account called "Land Improvements" by $1,00000 and what account should he credit it by the same amount?
4- He paid $5,0000 to construct the lower level (which is going to be apartment 1). To record this, what accounts should he credit it and debit it?
5- He paid $5,0000 to construct the ground level (which is going to be apartment 2 and 3). To record this, what accounts should he credit it and debit it?
6- He received a customer request to buy apartment 1, the price of the apartment is $3,00000, the customer will pay with checks due on 5/5/2017. To record this, he debited account receivable by $3,00000 and what accounts should he credit it by the same amount?
Regards
Mohamed
I am creating chart of accounts for a construction company which buys lands, make building then sell them as apartments, I have the below transactions and questions about them which simplify our scenarios. Could you provide me with answers?
1- Owner decided to invest 3 Million $ in his construction company. To record this this transaction, he debits the cash in bank account by $3,000000 and credits his equity account by the same amount.
2- The owner bought a land, it costs 1 million$. To record this, he credited the cash in bank account by $1,000000 and debited the cost account that designed to record lands. Can we make this cost account COGS?
3- He paid $1,00000 to complete the first stage of the construction process which is digging, paving and fencing. To record this, he debited the asset account called "Land Improvements" by $1,00000 and what account should he credit it by the same amount?
4- He paid $5,0000 to construct the lower level (which is going to be apartment 1). To record this, what accounts should he credit it and debit it?
5- He paid $5,0000 to construct the ground level (which is going to be apartment 2 and 3). To record this, what accounts should he credit it and debit it?
6- He received a customer request to buy apartment 1, the price of the apartment is $3,00000, the customer will pay with checks due on 5/5/2017. To record this, he debited account receivable by $3,00000 and what accounts should he credit it by the same amount?
Regards
Mohamed
0
Comments
2 - yes
3 - no more COGS and credit bank
4 - Dr COGS and Cr Bank
5 - as 4
6 - Sales
~It is a construction company so the building of the property is not an asset it is part of the trade. All construction costs are costs of sale. The sales are then sales. Other than this there will be labour costs and general running costs such as stationery, phone, travel, insurance, etc.
Burg
@Bertie what do you mean by retention account?
Regards
Burg
This is to cover, but not exclusively so, a period after finishing the build, to cover instances of the roof blowing off, or the contract taking longer than it should to complete.
There are many reasons and caveats behind retention. But at this stage it is good for you to be made aware of retention within the construction industry.
Does he plan to build his office on this land?
The trouble with this is that there are many questions, and each, if answered incorrectly through inefficient information provided will definitely prove costly.
Is the company holding this land as an investment for capital appreciation? The problem here is proving to HMRC that the land is an investment and not stock when the land is disposed of.
If I bought land tomorrow I'd be able to more than reasonably argue to HMRC it is to be held as an investment. For a construction company to do such will be difficult- it's got stock written all over it.
Do you work for the company? Are you the accountant? Is there an accountant if you are not?
I started a new business with my brother, works in construction industry, I am not an accountant but we have one. Just need to build a chart of accounts and use it in quickbooks ASAP. Do you have an accounting book on how to manage construction business?
Burg