Sample G/L Account setup for the transfer of payroll activity from the CCS Payroll to a G/L system.

The following discussion is based on the "XYZ Company" (Company 99). This setup is not to be considered a recommendation on account number choices, only an example on the use and setup of both the G/L Account structure and Earning and Deduction codes in so far as G/L accounts are concerned. This setup will create a balanced G/L export.

See also the G/L Account Form, Earning and Deduction form, and Payroll to G/L Export Dialog.

The XYZ Company's Chart of Accounts.

Extract from the G/L Journal Entry Report.

Notice that the NET amount of each check has been transferred with its detail including the employee number as well as the check number, however the other accounts have been summarized. This is due to the setting of the "Transfer Credit Detail" for E/D Code # 2 (Net).

The report is summarized for each payroll period. If there had been more than one liability period in the given payroll period (The payroll period used check dates that spanned a month or quarter), then each of these periods would have been summarized.

A separate journal is created for both the payroll side and the disbursement side (The payment of the liabilities in via the payroll system).

You should not post (transfer it to your G/L) until you are satisfied with the amounts, and G/L accounts.

The balanced entry:

Each code encountered during the G/L Export (or reporting process) will always create two entries, a debit entry and a credit entry. (All activity must be balanced). For many codes; however, only one side is desired in the completed report or transfer. To accommodate this, the use of a "Clearing" code is needed to hold the temporary amounts of all activity of any single sided code until the journal is completed. If the clearing account G/L number consists of all zeros, and if it is zero balanced at the completion of the journal, then it will not be included in the report or export process. If however, it does not balance (is not zero), it will be shown with both the debit and credit amounts that have been applied to it. This will balance your journal, however it is an error condition since it is unlikely you actually want to post to G/L Account "0000000000".

You may use multiple clearing accounts to help track down balancing problems. You may also use a clearing account other than a string of zeros, however such an account will always be shown on your G/L transfer and export processes, with both the credits and debits applied to it, even if the net result is zero.

Not entering a G/L Debit or G/L Credit Account number in the G/L Debit/Credit fields of each E/D code that is used in a paycheck or disbursement will generally cause an out of balance condition (Non zero clearing account) during the G/L transfer. Exceptions are vendor checks. These checks are never transferred directly to the G/L, the information in the disbursement file is used instead, therefor codes 60 through 63 generally do not need to be coded, unless you create a manual vendor check. Codes which do not affect the NET payroll or employers expenses, may not cause an out of balance condition if not coded; (TIPS for instance) however, the codes activity will not show in the G/L Export if not coded, which may or may not be desirable, depending on your requirements. Accruals (Such as vacation accrued, are optionally coded, depending on whether you wish to realize the expense when it is accrued, or when it is paid. -- Consult a CPA for information pertaining to which payroll transactions need to be shown in your G/L.

Let's look at the 401k coding as an example of both a single sided and double sided entry:

Code 600 - 401(K) Employer (as defined above) is a balanced journal entry on its own. Any activity involving Code 600 will always debit the G/L Account 7625-010 (401K Employer -- the Expense side) and credit the G/L Account 2162-000 (401K Payable -- The liability side). Notice however, Code 601 uses the account 2162-000, (the credit side -- we are increasing the liability) but the debit side is all zeros. The is because the employees side of a 401k transaction, causes a reduction to the employees paycheck, it is not an additional expense to the Employer, therefore we must code this as such for our G/L Transfer. Basically all employee expenses have debits accounts set to "00000000000" which is offset by a like entries in the compensation codes of the same paycheck. The net result is an in and out in the clearing account "00000000000", resulting in a zero balance for "0000000000", however the Employer is now liable for this Employee deduction.

Note: The compensations paid to an employee will offset the sum of the Net paycheck and all deductions by use of this same clearing account,

The posting for a paycheck having regular pay in the amount of $100.00 and 401k deduction in the amount of $10.00 only -- No Employer side or taxes are shown in this example for clarity.

We have thus expensed the compensation (account 7610-010) in the amount of $100.00, increased the 401k payable account 2162-000 by $10.00 and lastly reduced the checking account by $90.00.