Creating Percentage-of-Completion Journal Entries

The percentage-of-completion (POC) revenue recognition method allows you to match a job's revenue and costs to the periods in which they incur. Job Cost recognizes the job's revenue and expenses that are based on the percentage of the job completed in a period by creating and posting a POC journal entry.

If you use this revenue recognition method, the general ledger posting accounts entered in the Revenue Recognition Account Setup and Revenue and Exp Account Setup windows update when the entry posts.

Using a typical POC revenue recognition method setup, all job costs incurred for a period post to general ledger accounts as debits. The POC journal entry at the end of a fiscal period credits the accounts and expenses the costs in as a cost of sales for jobs. The POC journal entry recognizes revenue using the following:

Actual Cost or Labor/Forecasted Cost or Labor = Percent Complete
Percent Complete x Expected Contract Amount = Revenue Earned

If you use the POC method, you must use division posting accounts.

If you have any jobs that are excluded from POC, for example, fixed asset or warranty jobs, the POC entry ignores those jobs and any balance they may leave in the accounts. See Excluding a job from POC/RPO.

You must close the fiscal period prior to building and posting the POC entry for the fiscal period. For more information on closing periods in Job Cost, see Closing a Period or Month.

If any periods were closed and re-opened prior to building the POC entry, you may find discrepancies between the information that prints on your POC Edit List (before closing the period again) and the information that prints on your POC Entry List (after closing the period again).

1. Select Transactions > Job Cost > POC Entry.
2. The User ID defaults to the logged in user's ID.
3. The Date and Time fields will default to the current date/time when the build is started.
4. The POC Journal Number defaults in.
5. Complete the following fields:
   • Description
     Enter a Description to appear on posting reports identifying the POC journal entry.
   • Year
     The fiscal year corresponding to the year in which you post the POC entry appears as the default. You can change the year.
   • Period ID
     Enter a period ID. A transaction date showing the last date of the fiscal period displays. The POC journal entry reverses automatically on the first day of the next fiscal period. The reversing date also displays.
6. Select Build to build the POC journal entry. You must build the entry before printing an edit list to verify the accuracy of the transactions. The Build button changes to Post.
7. When the build process is complete, select File > Print to print the POC Entry List. Costs, Contract Earned, and other totals for jobs that are excluded from POC do not appear in the division or grand totals on this report. Unless you are using a separate division with separate accounts for non-POC jobs, excluding jobs from POC may be the reason for a discrepancy between the totals on the edit list and the balance in your accounts. 
8. If you need to revise forecasts for some jobs after you review the edit list, select Remove to remove the build. Build the entry again after revising forecasts and before posting. See Using Forecasted Costs for more information.
9. If the edit list is accurate, select Post to post the POC entry. You can print a posting journal when the posting completes.

If you marked the Percentage of Completion Options: Post through the GL option in the Posting Options window, the POC entry posts through the general ledger. If you did not mark the option, you must post the batch in the general ledger to update posting accounts in that module.

You must mark the Closing Jobs Journal Entry posting option (Microsoft Dynamics GP > Tools > Setup > Job Cost >Job Cost Setup > Posting Options) if you use the POC revenue recognition method. Closed jobs are not included in the POC entry. Marking the Closing Jobs Journal Entry posting option creates a journal entry recognizing the final revenue and costs for the job each time you close a job. For more information on closing jobs in Job Cost, see Closing a Job.