📌 Stage 3 · Capturing Actuals · Job Costing · Cost Log · 30–40 min
One journal for every non-labor dollar, typed the day the bill lands
Learning goals
- Log material purchases and subcontractor billings in one place
- Derive the cost type from the cost code instead of typing it
- Understand the W-9 and 1099-NEC duties that ride along with subs
Concepts
Two cost families, one journal
Every dollar that is not labor arrives as either a material purchase (Northgate Lumber, Cedarline Supply) or a subcontractor billing (Arroyo Electric, Vance Drywall, Bluewater Plumbing). Ridgeline logs both in the Cost Log: entry number, date, job, cost code, vendor, description, amount.
Splitting them would just mean two sheets with identical formulas. The cost type is derived from the code - 6100 Electrical is always a Subcontract line, 2210 Lumber is always Material - so no one ever misfiles a bill by picking the wrong category by hand.
💡 Tips:
- Log the bill the day it arrives, not the day you pay it: job costing wants the cost when the work happens, and the WIP math in Lesson 13 depends on dates being honest.
- Amounts are always positive. Credits and returns get their own row with the amount in hand-written parentheses never - keep the sign convention simple and let reports subtract.
The type lookup
Column F pulls the cost type from the Cost Codes sheet so grouping and filtering are trustworthy everywhere downstream.
=VLOOKUP($E5,'Cost Codes'!$B$5:$D$104,3,FALSE)E5 holds the cost code (2100). The range now spans columns B through D on Cost Codes, so column 3 of the range is the Cost Type column. Demolition code 2100 returns Subcontract. FALSE keeps the match exact.
Subcontractors bring paperwork
Hiring subs makes Ridgeline a paying contractor in the eyes of the IRS and the state. Before a sub sees a first payment, collect a completed Form W-9; if you pay them $600 or more in a year, a 1099-NEC is generally due in January. Oregon adds its own construction licensing and workers-comp verification duties for anyone you engage.
The workbook records the money only - it does not file forms or verify licenses. Keep the W-9 folder next to it. The Read Me sheet carries this same note so the file itself documents the practice.
💡 Tips:
- Consultants with subcontracted specialists: identical advice, identical sheet - W-9 before engagement, 1099-NEC tracking after.
Practice
Fixed case (Mar 1 – Jun 30, 2026). Pale-green cells are formulas. Cell F5 on Cost Log has been cleared - you will retype it.
- Read the kitchen purchases — The exercise opens on Cost Log. Rows 5 through 14 are the kitchen: demo, framing package, drywall, electrical, plumbing, cabinets, tile, paint - ten entries totaling $63,610.00.
- Retype the type lookup in F5 — Cell F5 is blank. Type =VLOOKUP($E5,'Cost Codes'!$B$5:$D$104,3,FALSE) and press Enter. Code 2100 returns Subcontract.
- Spot a Material line — Find CM-107 (row 11): Foxglove Cabinet Works, $19,450.00 - the biggest single purchase in the case, type Material. It is the line that pushes the kitchen to 86% complete in Lesson 13.
- Read the whole journal — Twenty-two entries across three jobs total $103,095.00: $63,610.00 kitchen, $11,690.00 deck, $27,795.00 bath. Combined with $5,560.00 of direct labor, direct costs to date are $108,655.00.
Online exercise
The spreadsheet below is editable — follow the practice steps right on this page. Steps that need ribbon menus should be done in your own Excel with the downloadable practice file.
Checklist
Work through each item; when every box passes, this lesson is done:
- ☐ Typed the VLOOKUP into F5 and got Subcontract
- ☐ Confirmed the cabinet entry CM-107 is typed as Material with a $19,450.00 amount
- ☐ Verified materials and subs to date total $103,095.00, and direct costs $108,655.00