My grammar is 💯 good I
7301 Points
Posted on 04 September 2021
Purchases a/c
To Creditor a/c
and
Creditor a/c
To Bank a/c
and you can create a ledger named Contractor as a creditor and pass on these entries
By Inventory xxx amount in contractors book on the Credit side
To Contractor xxx amount in Inventory book on the debit side
This should work out because there are fixed price contracts, cost plus contracts where you are not required to provide any material, but just pay for it due to accounting complexities.
If your building something for your own company
Then,
Contract fee expense a/c
To Contractor a/c
and use WIP accounting separately.