Here’s the 8 (or 10 if you have labor) line item journal entry suggestion for handling the WIP to COGS process for the moment:
Preliminary: If you made any changes to WIP or COGS GL accounts,
1. Reset the WIP accounts and COGS accounts as Job Cost in the Chart of Accounts with their proper Job Cost Type each.
Setup:
1. Create a Cost Code 999999 (or what ever number wouldn’t appear in the middle of reports that you name WIP2COGS. Name it “WIP to COGS Transfer.”
2. Create a Vendor with a code zzzzzzzzz (10 lower caser z’s).
Process (except for Subcontract):
1. Prior to closing the job (transferring WIP to COGS, etc.), print the GL by Job for the job for each of the cost types (Material, Subcontractor, Other, Equipment [and Labor if you use it]).
2. Create a journal entry line Credit in the WIP GL account for the total of each cost type (except Subcontractor – at this point) in which you enter the TOTAL for the Job and Cost Code Type M, O, or E. Use the new Cost Code 999999 (or whatever you created above for the cost code).
3. Create a journal entry line Debit in the COGS GL account for the total of each cost type (except Subcontractor – at this point) in which you enter the TOTAL for the Job and Cost Code Type M, O, or E. Use the new Cost Code 999999 (or whatever you created above for the cost code).
Process for Subcontract:
1. Create a journal entry line Credit in the WIP GL account for the total of the Subcontractor cost type in which you enter the total of the Subcontract amount for the job. Use the new Cost Code 999999, and use as the vendor zzzzzzzzzz.
2. Create a journal entry line Debit in the COGS GL account for the total of the Subcontractor cost type in which you enter the total of the Subcontract amount for the job. Use the new Cost Code 999999, and use as the vendor zzzzzzzzzz.
Result:
1. The WIP GL accounts by Job for that job will show zero.
2. The COGS GL accounts by Job for that job will show the correct numbers.