These instructions are provided as a guide for companies who wish to make journal entries to record payroll transactions prior to implementing Successware’s Payroll module. It is intended as an example of Successware’s recommendations on how to record payroll using reporting from another software package or reports provided from an outside payroll source.
Since journal entries only affect the general ledger, we recommend that you post the Net Payroll total to an accrual account rather than a cash account. Doing so will allow you to record the checks written through the Account Register. The transactions that you enter in the Account Register will credit the appropriate cash account by default. You will use a check distribution code that will post to the same accrual account to which you initially posted the net payroll, creating a “wash” entry in that account.
If you need assistance to determine what accounts should be affected, and what transactions should be posted, please share these instructions with your CPA.
Setup
You will need the following set up in order to manually post payroll according to Successware’s recommendations:
- An Accrued Wages account in general ledger
- A Check Distribution code to post to the Accrued Wages account
- A Register Account to record payroll checks
Accrued Wages General Ledger Account
Successware includes accrual accounts for payroll by default. Account 2101 is the default account for Accrued Payroll – Wages. You may use that account for the journal entry. You may add a different account if you wish.
To add a general ledger account:
1. Select Setup, then General Ledger, from the Main Menu.
2. Use the drop-down menu at Account Class to select 2000 – 2790 Current Liabilities.
3. Select the New Account button, or right-click and select New Account.
4. Use the drop-down menu to select the category Accrued Compensation, then select the account number you wish to use.
5. The system will display the data entry window where you will enter the description for the account.
6. Select Must print if you want to print the account on your Balance Sheet even if the balance is zero.
7. Select Save.
Check Distribution Code
You will select a Check Distribution code when you record the payroll checks in the Account Register. The check distribution code will determine what account the system will post to that will offset the credit to your cash account. Add a check distribution code that will post to the Accrued Wages account you will use in your journal entry.
To add a check distribution code:
1. Select Setup, then Reference Library, from the Main Menu.
2. Select Accounting from the list of Volumes.
3. Click on Check Distribution Codes and select the Open button to open the table.
4. Press Ctrl+Enter or right-click and select Modify mode to open the table for
editing.
5. Press Ins to insert a new line.
6. Enter the Code and Description that you wish to use. Be sure to select the Accrued Wages account that you will use in your journal entry.
7. Press Enter to save the new item, then press Esc to exit modify mode.
Note: If you added a different general ledger account for Accrued Wages, be sure to select that account for your check distribution code rather than 2101.
Register Account
If you issue payroll checks from a separate bank account, you must set up the account in Successware.
To add a payroll Register Account:
1. Select Setup, then Reference Library, from the Main Menu.
2. Select Accounting from the list of Volumes.
3. Click on Register Accounts and select the Open button to open the table.
4. Press Ctrl+Enter or right-click and select Modify mode to open the Cash Account Setup form.
5. Select the New button to add an account.
6. Enter the account number and description you wish to use for the account.
7. Click the Active? checkbox to indicate that the account is active.
8. Select Bank as the Account Type and use the drop-down menu to select the general ledger account you wish to use for the payroll account.
9. You may wish to select Default payroll account. The option has no impact on processing payroll as manual journal entries but must be selected once you start processing payroll through Successware’s payroll module.
10. Select Save to save your changes and close modify mode.
Entering Payroll
Whether you are using a payroll service, or are using other software to run your payroll, you should be able to obtain a summary report of the payroll.
The following Payroll Summary report is an example.
Use the totals on the summary report, and the worksheet on the next page to create your journal entries. Enter the account number your company uses next to the description and enter the amount of the entry in the blank column. The column will guide you to enter the transactions as debits or credits when you enter them in Successware.
Example:
Payroll Journal Entry Worksheet
Once you have determined what entries should be made you will:
- Create and Post Journal Entries, and
- Manually Post Checks or Disbursements in the Account Register
Creating Journal Entries
You will create journal entries in Successware and review them for accuracy prior to posting them.
To create journal entries in Successware:
1. Select Accounting, then Journal Entries from the Main Menu or select the Journal Entry icon on the toolbar.
2. Select the New button or press Ins to start data entry.
3. Enter the date you wish the transactions to post to the general ledger in Post Date.
4. Tab to the next field and enter a unique Reference for the batch of transactions.
For example, you may wish to use PR and date (i.e. PR121507).
5. Use the drop-down menu to select the appropriate Account and Dept. You may enter the account and department if you know them.
6. Enter the Description you wish to use and enter the amount in the appropriate Debit or Credit column.
7. Select Save to save the transaction.
8. Select New or press Ins to add the next entry and continue until all transactions have been entered.
9. The transactions will be added to the grid in the bottom portion of the screen as they are saved. If you make an error, you can edit or delete transactions by highlighting the transaction in the grid and selecting the Edit or Delete buttons. If you are editing, make the necessary corrections and select Save to save it again. Do not select the Delete All button unless you do wish to delete every transaction you have entered.
10. Once all transactions have been entered correctly select Journal Entries Report to print a list of the entries. Confirm they are correct.
11. Select Post to post all transactions. Once entries have been posted they cannot be edited or deleted. Any corrections that need to be made after posting must be done as new correcting entries.
Sample Journal Entries Report:
Note that the Net Pay is posted to Accrued Payroll – Wages, not Cash. When you enter the checks or other payroll disbursements in the Account Register you will credit cash.
Entering Checks or Disbursements
You will enter payroll checks or EFT transactions as manual payments in the Account Register. You will select the Check Distribution code that was created to post to Accrued Wages. Enter the transactions in the same manner that you will see them on your bank statement. For instance, if you use a payroll service and they transfer a lump sum as an EFT transaction, you will enter one transaction. If you see individual checks on your statement, you will enter individual pay checks.
To enter manual payments:
1. Select Accounting, then Account Register from the Main Menu or select the Account Register icon on the toolbar.
2. Click on Select an account to select the payroll register account from the drop-down list.
3. Select the Payment button located at the bottom of the form or press Alt+2 to open the payment form.
4. The payment type should default to Miscellaneous. If it does not, select Miscellaneous as the payment type.
5. Use the mouse to select the correct payment method. Select Debit to record EFT transactions.
6. Tab through the remaining fields entering the appropriate information.
7. After entering the check Amount, tab to the grid in the bottom portion of the screen. Press Ins or right-click and select New Item.
8. Select the payroll check Check Distribution code from the drop-down menu and enter a department of 00. (The code should post to Accrued Wages – 2101. Liability accounts are not departmentalized.)
9. Press Enter to save the line.
10. Select Post and confirm that you wish to post the check without printing.
11. Repeat the steps to enter all remaining checks or other disbursements. After entering the checks or disbursements in the Account Register, run the Check Register report to confirm the total payments match the amount you entered for Net Pay when creating your journal entries.
To run the Check Register report:
1. There are two ways to access the report.
- Before exiting the Account Register, right-click and select Check Register Report from the menu.
- Select the Report Gallery icon
from the toolbar. Then select Check Register from the Financial Reports group of reports.
2. Enter the check date in the From and Thru date fields.
3. The Account No. will be completed by default if you open the report from the Account Register. If not, select the correct register account from the drop-down menu.
4. If you have other transactions in the register for that date, you may need to use Item or Transaction type filters to segregate the transactions.
5. Select the print report button.
Sample Check Register Report:
The Accrued Wages general ledger account should have a balance of 0.00 when all entries have been posted.