27.1 Introduction

The Payroll System is an accrual system. The features of the Payroll System are discussed below.

There is an Employee File which contains both personal (name, address, phone, etc.) and payroll (social security number, pay rate, expense account, charge rate, etc.) information. A wages payable account in the General Ledger is specified for each employee, so different employee payroll amounts can be accumulated in different wages payable accounts.

The Payroll System also contains a set of deduction files. There is a Standard Deductions File which contains all the standard deductions for all employees. There is also an Employee Deduction File which records what deductions each employee has. There are no limits on the number of total standard deductions or the number of employee deductions.

Something unique to the Payroll System is the payroll history. Instead of keeping balances that are easily compromised, the Payroll System keeps a history of payroll transactions to determine cumulative figures. Thus, if an error in a previous payroll run is discovered, the associated voucher(s) can be changed and the payroll history is automatically corrected also.

Payroll is a voucher system similar to the Accounts Payable System. Labor hours are entered using a labor distribution data entry screen. Payroll vouchers can be computed from the labor hours or entered manually using a voucher data entry screen. The voucher date specifies the month in which the payroll expense is to be accrued. This allows future payroll vouchers to be entered at any time. The employee code entered is automatically checked against the Employee File to make sure it is a valid code. The checking account to be used when the voucher is paid is specified as is the gross pay, net pay and the due date.

An unlimited number of voucher distribution items may be specified. Each voucher distribution item records wage expenses or deduction amounts.

As a separate process, labor distributions entered with the labor hours data entry screen can be applied to jobs in process. If desired, payroll can be expensed directly to jobs at actual costs rather than applied at the standard labor rate.

There are reports for listing the Employee and Voucher Files. Vouchers can be listed by employee with or without the associated detail. Reports also list payroll registers by pay date. During the year, information for the 941 form can be printed. At the end of the year, W2 forms can be printed.