Where do you place things like retainage and OH? OH as part of cost? Retainage still recognized as part of billings because you're using accrual accounting? Thanks!
Thanks for the question! Costs on jobs should include retainage. You record the entire cost and your offset is a credit to accounts payable and retainage payable. If you're allocating OH to cost to date you should include an estimate for total OH in your estimated total cost. Otherwise you will inflate percent complete. Billings to date should include retainage. You record a credit to revenue for the entire amount, debit to accounts receivable and retainage receivable. I recommend creating a separate GL account for retainage so it doesn't skew your aged receivables. Hope that helped! If not please let me know! Thanks!- Ara
Where do you place things like retainage and OH? OH as part of cost? Retainage still recognized as part of billings because you're using accrual accounting? Thanks!
Thanks for the question!
Costs on jobs should include retainage. You record the entire cost and your offset is a credit to accounts payable and retainage payable.
If you're allocating OH to cost to date you should include an estimate for total OH in your estimated total cost. Otherwise you will inflate percent complete.
Billings to date should include retainage. You record a credit to revenue for the entire amount, debit to accounts receivable and retainage receivable. I recommend creating a separate GL account for retainage so it doesn't skew your aged receivables.
Hope that helped! If not please let me know! Thanks!- Ara