Am working in contracting company Can Any one help me to know the following with examples:
1. What is work in progress how it is calcuated? Can any explain me with example. HOw it is treated in accounting what are the journal entries
Suppose a project costing 100000 and cost incurred is 65000 estimated cost is 85000 and revenue booked is zero what is the accounting for this at the year of year
if project cost is 100000 and cost incurred is 65000 and estimated cost is 85000 and revenue booked is 55000
2. What is bank guarantee. How and where it appear in books of accounts. What are the journal entries for bank guarantee, margin money and margin on hold
Would be great if explained with example
Thank you
Francis

From United Arab Emirates , Dubai
Hello

Q-What is work in progress how it is calcuated? Can any explain me with example. HOw it is treated in accounting what are the journal entries

Suppose a project costing 100000 and cost incurred is 65000 estimated cost is 85000 and revenue booked is zero what is the accounting for this at the year of year if project cost is 100000 and cost incurred is 65000 and estimated cost is 85000 and revenue booked is 55000

A-See, Work in progrss is how many % of work completed, Your total contract value. Here your revenue 100000/-, Your cost as on date 65000/- but you estimate 85000/- Forget estimate. Just look 65000/- cost already incurred. Accordingly you find out how much you billed to your client. According to this your WIP is 80% Balance 20% pending

Q-What is bank guarantee. How and where it appear in books of accounts. What are the journal entries for bank guarantee, margin money and margin on hold

A-It's a gurantee issued by bank. Bank reserve the money against gurantee and give you the bond paper. BG Dr and Bank Cr

Marigin money is small % of amount of money deducted by bank, Like bank charges, You can say processing charges

Regards

Alok

From Saudi Arabia , Riyadh
If the contract price is 100000 and actual cost is 85000 and revenue actual booked is zero what shall i take wip progress for current year. What are the journal entries for the same
Does actually bank guarantee appears in book of accounts or its only the legar document like contigent liability

From United Arab Emirates , Dubai
Q-If the contract price is 100000 and actual cost is 85000 and revenue actual booked is zero what shall i take wip progress for current year. What are the journal entries for the same
A-See, If the contract price is 100000 and actual cost is 85000 then You consider your WIP is 100%, balance 15000/- profit automatically come to your PL Account. No need to book WIP %. If you work in a manufacturing concern then you want to find out WIP % then there is some other formula and workout to find out the WIP%
Alok

From Saudi Arabia , Riyadh
Ok As i am new to work in progress concept am confused. So u mean WIP is Sales? u said i should take 100 WIP does it mean i should make sales entry for 100% or what is the journal entry can u pls guide i dont know how to treat wip
From United Arab Emirates , Dubai
Hi my name is pramod, pusuing the CA Final course. I am maintaining the accounts of constructions company and it has 5 branches, as the management are eager to know the financial performance & financial position of the company, i want Balancesheet & Profit & Loss A/c in Excel Format.
Thanks & Regards
Pramod

From India , Bangalore
[QUOTE=francis_fernandes18;14228]Am working in contracting company Can Any one help me to know the following with examples:
1. What is work in progress how it is calcuated? Can any explain me with example. HOw it is treated in accounting what are the journal entries
Suppose a project costing 100000 and cost incurred is 65000 estimated cost is 85000 and revenue booked is zero what is the accounting for this at the year of year
if project cost is 100000 and cost incurred is 65000 and estimated cost is 85000 and revenue booked is 55000
Dear,
1,in here project cost is 100000, thts means you should invoiced to the customer for this amount this this amount is called contract revenue.
2,our actual cost is 65000.
suppose i take this project as compleated then we have to find the GP.
formula is = total project Revenue - cost incurred / total project Revenue then u vill get the GP % Our evenue Is 35000.
Eg-100000-65000/100000 =35%
Regards Ajas Mohammed

From Qatar ,
Dear All
First of all understand what is Work in Progress. Work in progress means that you started a work in a financial year but could not reach to final product in that financial year where you can sell or bill that product in that very financial year. The value of that WIP is the cost incurred till the stage you have reached by the end of that FY. It is shown in Balance sheet along with finished goods and inventory (as stock in trade) you are having at the date of Balance Sheet.
Now about Bank Gurantee: Bank gurantee is a gurantee issued by a bank that in case tou do not pay to a creditors the bank may pay on fulfillement of certain clauses as per BG. No book entry is required except a memorinda record of the same.

From India , New Delhi
If the 65000/- expense is already booked into your P& L ... then make an entry like below
Debit WIP for Aed 65000/-
Credit Purchase Aed 65000/-
here your WIP is only 65000/- (means the Exp incurred) or you can treat WIP smae like closing Stock

From United Arab Emirates, Abu Dhabi

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