The CIS enabled accounting packages I have seen create CIS Labour and Materials accounts classed as cost of sales accounts therefore appearing in the PnL. On a longer running project I would put them in Balance Sheet accounts as Work in Progress split into Materials and Labour etc. Then at the end of the project the balance sitting in the WIP accounts would be flushed out into the Cost of Sales accounts with a Journal to then appear as expenses in the PnL but until then they sit on the Balance Sheet. How do you deal with this scenario? If you don't use the designated accounts then the figures won't record CIS figures correctly as they don;t go into the expected accounts but if you do they appear in the PnL before you want them to. (My work around would be to process as required for CIS then use a Journal to move to the WIP accounts then back to PnL at the end of the project but this obviously involves more steps/complexity.)
Interested in what others do and if you agree/disagree with treament in general.
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If I am reading your post right you shouldn't be posting the CIS to the WIP:
1) Invoice: Labour DR WIP, Materials DR WIP, CR PL Control Account.
2) Payment: DR PL Control Account, CR Bank, CR PAYE Control Account (CIS to be paid to HMRC with PAYE etc)
3) Project completed DR COS, CR WIP.
Hmmmm - it's a bit like a stock control system for CIS, is it not ?
Do you do this with the materials ?
If not, I can't see the point. And I think you'll have trouble operating it without some bespoke changes to your software.
sounds like its complicated because you are making it so
clear books is spot on
the Labour & materials are both cost of sale items in the profit and loss account
they only become work in progress if the project is still in progress at the company's year end.......
The problem is that the OP wants the accounting system to keep a track of WIP whilst continuing to carry out its more traditional accounting function.
The problem is that the OP wants the accounting system to keep a track of WIP whilst continuing to carry out its more traditional accounting function.
clearbooks is a great bit of kit
each development could be set up as a project, allowing a seperate report to be run to see the exact costs incurred to date and therefore the WIP values....simples
lionofludesch wrote:
The problem is that the OP wants the accounting system to keep a track of WIP whilst continuing to carry out its more traditional accounting function.
clearbooks is a great bit of kit
each development could be set up as a project, allowing a seperate report to be run to see the exact costs incurred to date and therefore the WIP values....simples
Sure - but then those costs would have to be transferred back at the end of the project - analysed between purchases, subcontractor costs and whatever else. I'm not convinced that's easier.
I think the problem you have is that you are trying to get management data out of your financial data
the substance of the transactions are that you've incurred profit and loss expenses - they are only WIP if in progress at year end
using projects on CB will give a full breakdown of costs as a P& L and show the exact WIP at any one point in time
Personally, I think it's a lot of faff on a system that's not designed for the purpose.
I'd rather keep a track of WIP on a spreadsheet and keep the main records conventionally.
That's not to say that's definitively correct. But it's what I'd do.
What the OP needs to ask himself is "Am I keeping these records to track WIP ? Or to keep conventional accounting records ?"