Payroll Account Code Definition

Overview

"Payroll Account Code Definition" enables definition of payroll account distribution offset groups. Payroll code groups are used during payroll processing to distribute the account offsets for payroll check incomes and deductions. A payroll account code is specified for a payroll run to determine the gl accounts used for accrued payroll, withhoding liabilities and employer contributions to FICA and Medicare. Payroll codes can also be specified at the employee level which will take precedence over the payroll code assigned to a payroll run. (If no code is assigned to an employee, the specified payroll run default code will be utilized.) Additionally, a project default value may be specified to ensure payroll offset distributions are tracked to the specified project. This can be important when all control accounts must be recorded in a project in order to maintain a balanced subledger (i.e. when all general ledger account numbers have been marked as project required).

Entry tips

Type "?" in a promptable line edit and press TAB to view and/or select a code value. Click on the desired code in the related selection display to select the code value.

Processing

Type a new payroll account code name value to define a new code. Enter the ledger to which the new code is to be assigned and a short description of the code. Enter all gl account numbers on the display. Enter a project restriction if needed - i.e. when the accrued payroll account has project required status. Click "Save" to validate and save your changes.

Prompt for an existing account code via "?". Modify record as needed and click "Save" to save. Delete the currently selected payroll account code via "Delete".

Payroll account codes work in conjunction with bank definitions and income and deduction definitions to guide general ledger account distribution in the payroll system. Cash and liability account mappings are obtained from bank and payroll account code definitions. Expense and withholding accounts are determined by the respective income and deduction account directives. The table below describes how general ledger accounts are distributed during payroll processing:

ActionDistributionDebitCreditSource
Payroll runLabor expenseXXIncome Definition - GL account
Accrued payrollXXPR Code - Accrued payroll
          
Cash disbursementAccrued payrollXXPR Code - Accrued payroll
CashXXBank Account Definition - Payroll cash
          
Employee deductionAccrued payrollXXPR Code - Accrued payroll
Witholding liabilityXXDeduction Definition - GL account
          
Employer matchEmployer expenseXXDeduction Definition - Match Debit account
Witholding liabilityXXDeduction Definition - Match Credit account
          
Employee FED/FICA/MEDAccrued payrollXXPR Code - Accrued payroll
Witholding liabilityXXPR Code - FED/FICA/Medicare withholding
Employer FICA/MEDFICA/Medicare expenseXXPR Code - Employer FICA/Medicare
Tax accrual liabilityXXPR Code - FICA/Medicare withholding

Payroll cycle payments account distributions are posted to the General Ledger accounting period of the payment date. An accrual may be required to properly reflect payroll expenses in the proper period if a payment occurs after period end for which the wages were earned (this is often related to hourly pay cycles). For example, employee Sally is paid on Jan 6 for hours worked from December 26 through January 6. Assuming 50% of the wages apply to December an accrual entry might be entered into the GL system (an auto-reversing entry) as follows:

Journal entry posted by Payroll system at payment cycle (Jan 6 - calendar year GL period 1):

AccountDescriptionDebitCredit
300.6045WAGES2307.70  
300.6051PAYROLL TAXES176.54  
300.2145FEDERAL PAYROLL TAX WITHHELD  592.80
300.1015CASH - PAYROLL  1780.11
300.2147STATE TAX WITHHELD  111.33

Manual accrual entry GL accounting period 12 (auto reverses in GL period 1)

AccountDescriptionDebitCredit
300.6045WAGES1153.85  
300.6051PAYROLL TAXES88.27  
300.2100ACRRUED PAYROLL  1242.12

This will result in the proper matching of payroll expenses to the accounting period in which it was earned.

Field descriptions

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