In a construction company, you would typically see several different types of journal entries depending on the nature of the transaction. Some of the main journal entries you may see in a construction company are:
Relevant Templates:
Journal Entries
- Material Purchases: This entry records the purchase of construction materials and is typically recorded as a debit to the "Materials" account and a credit to the "Accounts Payable" account. When payments are sent out, you can then debit "Accounts Payable" and credit "Cash".
- Labor Costs: This entry records the cost of labor incurred during the construction process and is typically recorded as a debit to the "Labor" account and a credit to the "Accounts Payable" account.
- Equipment Purchases: This entry records the purchase of construction equipment and is typically recorded as a debit to the "Equipment" account and a credit to the "Accounts Payable" account.
- Construction Expenses: This entry records any other expenses related to the construction process, such as permits, utilities, and insurance. It is typically recorded as a debit to the appropriate expense account and a credit to the "Accounts Payable" account.
- Construction Revenue: This entry records the revenue earned from completed construction projects and is typically recorded as a debit to the "Accounts Receivable" account and a credit to the "Construction Revenue" account. When cash is collected on account, you can then debit "Cash" and credit "Accounts Receivable".
- Depreciation: This entry records the depreciation expense of construction equipment over time and is typically recorded as a debit to the "Depreciation Expense" account and a credit to the "Accumulated Depreciation" account.
Article found in General Industry.
