How to Transfer WIP to Cost of Sales on Project Close-Out
Transferring all remaining WIP costs to Cost of Sales upon project completion and final revenue recognition.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cost of Construction (COGS) | Expense (+) | 3,500,000.00 | - |
| Work-in-Progress (WIP) | Asset (-) | - | 3,500,000.00 |
💡 Accountant's Note
At project completion, all accumulated WIP is flushed to Cost of Sales to match the final revenue recognition. This is the ultimate matching entry for a long-term construction contract.
Practitioner & Systems Framework
💻 ERP Architecture
Change the project status to 'Closed' in the ERP. The system will run a final routine to zero out WIP, clear Billings in Excess/Costs in Excess accounts, and true-up Final P&L. Ensure no further POs or timesheets can be charged to the job.
⚠️ Audit Flags
Cutoff testing. Auditors verify that the close-out matches the physical completion date and that all trailing costs (final subcontractor invoices) have been accrued before flushing WIP.
📄 Required Documentation
Taking-Over Certificate (TOC), Final Account agreement, and ERP project close-out checklist.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.