To adjust your books to reflect work in progress

If you haven't already read the Activity Slips Overview, see Tracking work in progress on your balance sheet for more information.

  1. 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." See Creating accounts for more information.

  2. At the end of every month, print an Activity Slip [Activity Summary] report. 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 To fields. See Choosing what you want to do with the report for more information.

    When you print the report with this information, the total in the Balance $ column is your month-end work in progress amount.

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

  1. Enter the date of the last day of the current month in the Date field.
  2. 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.
  3. On the next line, balance the transaction by entering the same amount as a debit to the Work in Progress - Accrued account.
  4. Record the transaction.

    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. See Creating General Journal entries for more information.

Hint: Save the general journal entry as a recurring transaction

 Save the general journal entry as a recurring entry called "WIP, Monthly Entry." Then, you can use it every month to enter the value of your work in progress. You'll have to change only the amounts before you record it.
  1. At the end of the next month, create another general journal entry to reverse the first one in the following manner:

  1. Enter the date of the first day of the current month in the Date field.
  2. Enter the month-end work in progress amount from the report you printed in step 2 as a debit to the Work in Progress - Income account.
  3. On the next line, balance the transaction by entering the same amount as a credit to the Work in Progress - Accrued account.
  4. Record the transaction.

Hint: Save the general journal entry as a recurring transaction

 Save the general journal entry as a recurring entry called "WIP, Reversing Entry." Then, you can use it every month before you enter the value of your work in progress for the new month. You'll have to change only the amounts before you record it.

    This general journal entry prepares your books for the entry of the value of the new month's work in progress. This entry reverses the first entry and prepares your accounts for the next month-end work in progress entry. If you don't enter a reversing general journal entry for the previous month, your financial reports won't reflect the correct value of your work in progress.

  1. Follow steps 2 through 4 every month. Your books will show the value of your work in progress.

To adjust your books to reflect work in progress