Work in Process as a Control Account
Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
A control account in the Chart of Accounts is used when there is a need to separate multiple third parties with a similar function. Work in process works perfectly as a control account.
In this article I’m going to explain the old method used to track projects and how the control account makes entering data faster. But more importantly retrieval of project information remains alive even after completion of the project.
Work in Process – Historical System
The method used in the past and still used today by some bookkeepers is the parent-child system for account structure. A master account is created in lieu of an account for each project. Then a child account is created for each project as an extension similar to below:
Account Number Description
1200 – Work in Process Master Account
1200-01 Project ‘A’ Smith Family Room Addition
1200-02 Project ‘B’ Carson Family Bathroom Remodel
This system works well as the values in the respective child accounts equal the total value in the parent account, i.e. the children feed information to the parent.
So what are the drawbacks?
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