What happens when I post WIP? [in-depth guide]

Below demonstrates what occurs when posting 'work in progress' based on the transaction type.

Each section provides WIP posting detail before & after a billing cycle. To help with clarity,  each transaction type is examined on its own. Each transaction type group will display the effects on financial reports. 

Each transaction type section is organized to show 4 transactions in 'unbilled' vs. 'bill cycle complete' status. The timing is to demonstrate Month 1: unbilled transactions (transactions remained unbilled after the months billing cycle) >>Month 2: transaction is billed, marked as billed, written off or transferred. 
The billing actions taken were done in the following month for demonstration purposes. The billing action taken can occur at any time in a following period and may be posted out of WIP independent of each other.

NOTE: Transferred transactions will always have 2 WIP transactions following a transfer: one to show the transfer WIP out from project A and one to show the transfer WIP in to project B. The transfer date becomes the 'transaction date' for project B. This is to keep the financial data correct for the selected date range.

1) Unbilled transactions:

• WIP posting detail
• WIP analysis report
• Corporate P&L
• Balance sheet
• Trial balance

2) Transactions following billing cycle: 

• WIP posting detail
• WIP analysis report
• Corporate P&L
• Balance sheet
• Trial balance

GL tracking pptions

The WIP tracking accounts used in the following examples are setup via Menu > Admin/manager > System setting > GL settings > GL tracking options: Work in progress tracking

Individual

Labor

 

 

 

Default labor WIP GL accounts

 

Labor: Prior to billing cycle

WIP posting detail

WIP analysis report

 

Corp P&L: NOTE: unbilled labor is tracked to an 'other income account'.

 

Balance sheet: NOTE: the unbilled time posted to a 'current asset account'

 

Labor following billing cycle

 

Posting detail: NOTE: the transaction transfer shows a 'marked as billed' amount and a 'labor in' amount. This is due to the original transaction. The transaction from the original project needs to be cleared from that project on the "date of transfer" to keep the Project/client P&L reports accurate.

 

WIP analysis: all transactions have posted out of WIP other than the transferred transaction that remains 'unbilled' but in a new project.

Corp P&L: NOTE: $135 was billed: $405 is reversed out of the 'other income account'. This leaves a balance of $135 in the 'other income account' as the transfer transaction remains 'unbilled'.