Recording Payroll with a Journal Entry

If you use the Vision Payroll application, Vision enters payroll data on your General Ledger when you post payroll transaction files. If you use a different application to process your payroll, you must record payroll entries manually in the general ledger. Typically, you do this with a journal entry transaction.

You can create a journal entry to distribute the amount in the Job Cost Variance account to the appropriate salary and withholding accounts. This causes payroll amounts to display on your Income Statement.

You can post time charged to Vacation, Sick, Holiday, and other overhead projects to separate indirect expense accounts. To use separate accounts, you must enter the accounts in Configuration > Accounting > Time Analysis.

A journal entry (payroll) debits the Job Cost Variance account for the amount of your gross payroll and your employer's portion of FICA. It then credits either a Salaries Payable account or a Payroll Checking Account for the net payroll, and credits various withholding accounts for tax and benefit withholdings.

To record payroll with a journal entry, you complete the following actions:

• Debit the Job Cost Variance account for the gross payroll amount.
• Credit the amounts withheld from employees' paychecks to the appropriate withholding accounts.
• Debit the Employer’s FICA Expense account for the employer's FICA withholding portion and credit the same portion to the Employer's FICA Withholding account. You can enter these debits and credits as part of the journal entry for payroll, or in a separate journal entry,
• Credit the remaining amount – net payroll – either to a Salaries Payable liability account or directly to a Payroll Checking asset account. If you are crediting a Salaries Payable account, you must record the disbursement of cash either in the current period, or in the next fiscal period. This can be done with a cash disbursement.

After you post the Payroll Journal Entry, the balance remaining in the Job Cost Variance account represents the difference between the job cost amount and the amount actually paid to employees. This amount is often a credit balance, because the job cost amount exceeds the amount actually paid to employees.

Example

Journal Entry No. 101 Date 01/16/07

Description: RECORD PAYROLL 01/15/07

Project	Account Number	Account Name	Debit	Credit
1.00*	703.00	Job Cost Variance	8,500.00
	721.00	Employer FICA	650.00
	231.00	Salaries Payable		5,720.00
	232.00	FICA Withholding		1,300.00
	233.00	Federal Withholding		1,700.00
	234.00	State Withholding		330.00
	235.00	Insurance Withholding		100.00
		Totals	9,150.00	9,150.00

* 1.00 is the General Overhead Project number recorded on the Posting tab of Configuration > Accounting > Company Settings.