The last step is to enter the current year-to-date payroll information from your existing system. This pay history is needed for application of the deduction limits and parameters. For example, the gross pay limit on social security deductions is currently $48,000. The Payroll System needs to know how much gross pay has accumulated during the current year so that subsequent deductions can be calculated correctly. However, it is assumed that these vouchers have already been posted, paid and included in the current General Ledger balances. If the history vouchers were added using the normal steps, the effect would be to double the payroll expenses thus far. The solution is to enter manual payroll vouchers using a clearing account in place of the normal payroll expense or liability accounts. These vouchers should be entered to the same accounting period along with all other setup procedures.
The screen where such entries are made is selection Pay vouchers on the Data Entry, Payroll menu.. For more information on how to add vouchers, see Chapter 32, Manual Vouchers.
As a footnote, all that is required here is a summary of past payroll. It is not necessary to enter all of the vouchers from the beginning of the year. Two vouchers per employee (one if starting within the first quarter) are all that is required. The first voucher is a year-to-date summation as of the start of the current quarter. The second voucher is a quarter-to-date summation. If the Payroll System is being started at the beginning of the year, no vouchers need to be entered. If the 941 report is not needed, only a year-to-date voucher needs to be entered.
An example of a pay history payroll voucher might look like this:
Note the following data entry requirements:
The pay period dates must be included in your specific setup period. For example, if you were setting up your beginning balances within the 6th period of year 1983 and expect to begin daily accounting activity in the 7th period of year 1983, make sure that the ending date is included in the 6th period of year 1983. Remember, the ending date controls the accounting period in which the voucher is included for month end financial reports.
Although not a requirement, it is suggested that the voucher number or code be identified as a beginning balance entry, e.g., begin83-pr001.
Since you are paying these vouchers in the setup accounting period, be sure the pay date is included in such period. More about paying the voucher later in this section.
Since these payroll amounts have been paid previously, do not use the cash account in this field. Note: this is for setup procedures only. Enter a predetermined general ledger clearing account number in this field. This account is the same account number used in all the detail lines of the payroll voucher. The result is that the balance of the clearing account, once these vouchers are paid, is zero.
The journal is gl for the General Ledger and the account is the predetermined clearing account from the list of general ledger chart of accounts.
Once all your setup vouchers have been entered and are determined correct in their content, the vouchers must be paid to remove the accrued payroll that was created.
When each employee record was created using the enter employees data entry screen, a controlling account was specified. When payroll vouchers are created, the net pay is posted to this account as a credit entry. Because this net payroll was previously paid, the accrued status of the vouchers must be removed by "paying" the history vouchers. This is done by running the Make payroll pay list selection on the Data Entry, Payroll Payments menu, followed by the Print payroll checks selection on the Reports, Payroll Payments menu.
The result of this procedure is to cause the balances of all affected accounts in the setup voucher to become zero.
To summarize the effect of the sample voucher shown above to the general ledger chart of accounts, the following occurs assuming that our chart of accounts includes account number 236 as the accrued payroll controlling account and account number 950 as our clearing account:
1. When the voucher is entered the following entry is made to the General Ledger:
Debit Ledger Account Amount
yes gl 950 8,898.50
no gl 236 8,898.50
2. When the voucher is paid the following entry is made to the General Ledger:
Debit Ledger Account Amount
yes gl 236 8,898.50
no gl 950 8,898.50
Note that the effect on the account balances by the above entries is zero. This completes the setup portion of payroll.