How MSI Payroll posts to the General Ledger Version 6.0

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How MSI – Payroll posts to the General

Ledger

Version 6.0

User’s Guide

Municipal Software, Inc. 1850 W. Winchester Road, Ste 209

Libertyville, IL 60048 Phone: (847) 362-2803

Fax: (847) 362-3347

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The MSI-Payroll module will account for the employer’s expenses (wages paid, employer share of FICA/Medicare taxes, and employer paid pension/insurance contributions) by debiting the defined GL Expense Accounts setup on the maintenance screens defined below. Any deductions withheld from the employee checks (and any associated employer contributed amounts that are also owed to the various agencies) will credit the defined GL Liability Accounts. The difference between these debits and credits will offset to CASH.

If Liability Control is activated within the system, then the Liability Accounts will retain the credit amounts until a liability check is cut to the appropriate agency, at which time the MSI-Payroll system will debit the GL Liability Account and credit CASH. Otherwise a journal entry can be entered directly into the MSI-General Ledger when the agencies are paid via alternate methods.

The MSI-Payroll system will also allow for wages to be reduced by inputting negative hours worked, and for wages to be increased by inputting negative deductions taken. In this case, the negative wages will

credit the defined expense account and the negative deductions will debit the defined liability accounts.

So, when employee check detail is posted, the debits go to the MSI-General Ledger Expense Accounts and will consist of the employee’s gross wages, any negative deductions, and the employer contributions for taxes, pensions, and insurance.

The credits go to the GL Liability Accounts and will consist of any negative wages and deductions taken from the employees’ paychecks (along with any matching contributions from the employer).

Offsets are defined in the System Defaults screen and in the General Ledger’s Fund Code Maintenance

screen.

Debits (Expense Acct) Maintained where? Credits (Liability Acct) Maintained where? Gross Wages Employee Maintenance

and Hours Type Code Maintenance

Regular Deductions – including Direct Deposit (also includes the employees’ deductions and any matching employer amounts)

Federal Tax Rates, Pension Code Maintenance, Voluntary Deduction Code Maintenance, Insurance Code Maintenance Employer Contributions

for taxes, pensions, and insurance

Federal Tax Rates, Pension Code Maintenance, Insurance Code Maintenance Negative Deductions (resulting in increased wages)

Federal Tax Rates, Pension Code Maintenance, Voluntary Deduction Code Maintenance, Insurance Code Maintenance Negative Hours (resulting in reduced wages) Employee Maintenance and Hours Type Code Maintenance

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DEFINING GL ACCOUNTS

There are several setup screens within the MSI-Payroll system used to define where the various activities will post to the MSI-General Ledger System:

• System Defaults

• Employee Maintenance • Hours Type Codes • Federal Tax Rates • Pension Codes

• Voluntary Deduction Codes • Insurance Codes

SYSTEM DEFAULTS

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Use as Default?

When this flag is set, the program will use the Due To/From Account defined in MSI-General Ledger Fund Codes Maintenance as the payroll interfund offset. Otherwise, uncheck the flag so the program will use the “Due To/From Interfund account” from Payroll System Defaults as the payroll interfund offset. General Ledger Account Information

Enter the general ledger accounts, which the system will credit when posting to the general ledger.

Accrued Account – Is the payroll offset in the split payroll distribution

Cash Disbursement Account – Is the payroll offset account when posting to the GL normally (not a split) Due To/From Interfund Account – Is the payroll interfund offset for the fund. If the “Use Default” flag is

set in the system defaults, the program will use the Due To/From Account from the fund as the payroll interfund offset. Otherwise, the program will use the Due To/From Interfund account from system defaults as the payroll interfund offset.

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EMPLOYEE MAINTENANCE

Access this screen from the Payroll System Main Menu by going to Maintenance > Employee Maintenance. The below marked fields are used to define the expense accounts for an employee’s earnings. There are two places in the Employee Maintenance screen where GL accounts can be defined.

Under the Pay Info tab – defines where wages (other than the employee’s regular pay) will expense Under the GL Distribution tab – defines how the employee’s regular pay will expense

Pay Info tab

Additional Pay Types fields

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Pay Code

Specify the hour’s type code for the additional pay this employee is to receive. Frequency

Defines how often the employee is eligible to receive the additional pay. When the Hours Workfile is created at the start of each payroll, the system will use the “Pay Period” defined to determine which additional pay types to load into the employee’s Time Card. The available options are described in the below data table.

1 – First pay period only 2 – Second pay period only

3 – Third pay period only 4 – Fourth pay period only

5 – Fifth pay period only A – All pay periods

B – Both first and second pay periods Rate

Enter the hourly rate the employee will earn for the additional pay. If left blank, then the detail will need to be input via Time Card Entry in order for the employee to be paid these wages.

Hours

Enter the number of hours for which the employee will be paid. If left blank, then the detail will need to be input via Time Card Entry in order for the employee to be paid these wages.

G/L Account Number

Enter the general ledger expense account that the additional pay type should debit. If left blank, the program will determine the general ledger account(s) to use from the employee’s defined GL Distribution account setup.

GL Distribution tab

G/L Account Number (required field)

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Description

A display of the description of the MSI-G/L account number entered in the previous field. Percentage (required field)

Enter what percentage of the salary expense is distributed to this account. The total of all values entered must equal 100%.

HOURS TYPE CODES

Access this screen from the Payroll System Main Menu by going to Maintenance > Hours Type Codes. The below marked fields are used to define the expense accounts for an employee’s earnings.

G/L Account Number

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Substitution Account #

Wages paid via the “REG” code will distribute to the MSI-General Ledger based upon the employee’s GL Distribution. For other Hours Type codes, if the expense should post based upon the employee’s GL Distribution, with the exception of a component (fund, department, class, subclass, or object), then input that substitution here. Meaning, if ++-++-++-5150 is input as the Substitution Account #, then the wages paid out for this Hours Code will debit the 5150 account(s) related to the employee’s GL Distribution setup. So if the employee is setup in Employee Maintenance to have 20% of their wage post to 01-01-22-1236 and 80% of their wage posts to 02-01-01-01-22-1236 – then earnings from this Hours Code will post 20% to 01-01-22-5150 and the 80% to 02-01-22-5150.

NOTE: If the wages paid out for the Hours Type Code should post based upon the employee’s GL Distribution, then do not input anything to the “G/L Account Number” or “Substitution Account #” fields. Then as long as the Hours Type Code isn’t added to the employee as an Add’l Pay Type with a specific GL Account AND the Hours Type is not input to Time Card Entry with a specific GL Account, the wage will post based upon the employee’s GL Distribution.

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FEDERAL TAX RATES

Access this screen from the Payroll System Main Menu by going to Maintenance > Federal Tax Rates. The below marked fields are used to define the liability accounts for the taxes withheld from the

employees and the expense accounts for the employer’s contributions.

Fed. Tax Acct. - The liability account to which the federal taxes withheld from the employee checks should be credited. When the liability check is issued to the IRS, this same liability account will be debited with the offset posting to CASH.

FICA Employee Account # - The liability account to which the FICA taxes withheld from the employee checks (along with the employer’s contribution) should be credited. When the liability check is issued to the IRS, this same liability account will be debited with the offset posting to CASH.

FICA Employer Account # - This field can be wildcarded with pluses and represents the expense account(s) to which the FICA taxes owed by the employer should be debited.

Medicare Employee Account # - The liability account to which the Medicare taxes withheld from the employee checks (along with the employer’s contribution) should be credited. When the liability check is issued to the IRS, this same liability account will be debited with the offset posting to CASH.

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How does the system split the employer’s expense for FICA/Medicare when more than one GL Wage Account is being debited?

The system will compute what the percentage each wage line is of the whole gross pay. And it will then multiply the computed FICA and Medicare deductions by that percentage and post that amount to the corresponding GL account for the wage line. See the example below that illustrates how this works. For an employee who’s Gross Wage is $1200 consisting of:

Line Wage Hours Code Expense Account % of $1200 Gross Wage 1 $500.00 REG 01-11-35-511-2100 $500/$1200 = 42% 2 $400.00 REG 02-11-35-511-2100 $400/$1200 = 33% 3 $100.00 REG 08-11-11-511-2100 $100/$1200 = 8% 4 $200.00 TRA 11-11-35-511-2100 $200/$1200 = 17% FICA Tax owed = $1200 * 6.2% = $74.40

Medicare owed = $1200 * 1.45% = $17.40 When the Fund portion is wild-carded where FICA Tax goes to ++-11-11-521-3610 and Medicare goes to ++-11-11-521-3620…

the system would expense the FICA/Medicare as shown:

Line Tax Expense Account Amount

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PENSION CODES

Access this screen from the Payroll System Main Menu by going to Maintenance > Pension Codes. The below marked fields are used to define the liability account for the pension withheld from the employees and the expense accounts for the employer’s contributions.

Employee Account # - The liability account to which the pension withheld from the employee checks (along with the employer’s contribution) should be credited. When the liability check is issued to the retirement agency this same liability account will be debited with the offset posting to CASH.

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VOLUNTARY DEDUCTION CODES

Access this screen from the Payroll System Main Menu by going to Maintenance > Voluntary Deduction Codes. The below marked field is used to define the liability account that will be credited with the amounts withheld from the employee paychecks.

Account Number

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INSURANCE CODES

Access this screen from the Payroll System Main Menu by going to Maintenance > Insurance Codes. The below marked fields are used to define the liability account for the insurance amount withheld from the employees and the expense accounts for the employer’s contributions.

Employee Account # - The liability account to which the insurance amount withheld from the employee checks (along with the employer’s contribution) should be credited. When the liability check is issued to the insurance agency this same liability account will be debited with the offset posting to CASH.

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TIME CARD ENTRY

Once all the setup is completed and it’s time to process a payroll, you can use Time Card Entry to override the default GL accounts that load in when the payroll is started (based upon how all the prior setups are completed) so that the wages post to a different GL number. NOTE that the system will post to any GL account input via Time Card Entry. Edits made here will “trump” setups done on the prior screens. Access this screen from the Payroll System Main Menu by going to Cycle > Time Card Entry.

In the event that it says

“MULTIPLE ACCT”, simply click the icon at the top of the screen to see the GL Distribution defined in this employee’s Maintenance setup:

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ISSUING PAYCHECKS WITH NEGATIVE DEDUCTIONS AND HOURS

The MSI-Payroll module allows users to input negative deductions to Time Card Entry’s override tabs in order to reimburse deductions withheld in error. It will also accept negative hours if wages were paid out via the wrong Hours Type code or to reduce gross pay when too much was paid out.

WHICH FIELDS IN TIME CARD ENTRY ACCEPT NEGATIVES?

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3) On the fourth tab labeled “Deduction Overrides”, each section (Pension, Insurance, and Voluntary Deduction) will accept a negative dollar amount.

HOW DO NEGATIVE HOURS AFFECT MY PAYROLL POSTING?

Typically, wages paid to an employee will debit the defined expense account. When wages are reduced by negative hours, then the GL account defined for that entry will be credited for the amount of the negative earnings.

HOW DO NEGATIVE DEDUCTIONS AFFECT MY PAYROLL POSTING?

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DISTRIBUTE TO TWO ACCOUNTING PERIODS

This option allows you to post part of your payroll to two different accounting periods. This comes in handy when part of the time being paid is for the prior fiscal year and part if for the current fiscal.

Taking the option off the Cycle menu will give you a screen that looks like the one below. The only field to populate is the percentage you want to post back to the prior accounting period. Once that’s entered, then simply specify “Y” at the bottom of the screen in order to print the new distribution journals that specify what will post to what fiscal and what period.

Note: The “earliest period” is determined by subtracting 1 period from the Accounting Period that was specified when the Hours Workfile was created. For example, if the Hours Workfile was generated with Accounting Period 12, then the “earliest period” would be “11”. If the Hours Workfile is generated with Accounting Period “01”, then the system will actually post two journals to the prior fiscal, one to period “13” and one to period “12”.

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Then when you start your payroll, specify the “Accounting Period” to be the “highest” period. For

instance, if you want the journal to post to both periods 03 and 04, then specify “04” when you create the hours workfile in Payroll. If this is a split between two fiscals, then specify Accounting Period “01”.

When you get to the point where you print your Distribution Journal, input the “highest” Fiscal. If the journal is being split between two periods in the same fiscal then the selection here will likely be the defaulted entry, but if splitting between two periods that are in two fiscals, make sure to input the “highest” fiscal. For instance, if posting to period 01 of “2010” and period 12 of “2009:, then input “10”.

Then when you get to the screen for the payroll split, input what percentage you want to post to the “earliest” period. If posting to periods 03 and 04, then input the percentage to post to “03”. If posting to periods 12 in one fiscal and 01 in the next fiscal, then input the percentage that should post to period “12”.

The process of splitting the payroll will generate a “REDISTRIBUTE PAYROLL FOR G/L” report that should be reviewed carefully to make sure that there aren’t any undefined account numbers and that you are pleased with the way the system has split the posts. If you decide not to let the system split the posting then simply re-run the Distribution Journal for the system to clear the split so that the entire journal can be posted to one period (the period defined when the Hours Workfile was created). When ready to post the redistributed payroll, then go to the Post to General Ledger option off the Payroll’s cycle menu. It will post to the General Ledger in the same sequence that the journals printed out on in the “REDISTRIBUTE PAYROLL FOR G/L” report – so when you first go to the Post screen, make sure to input the desired Journal Number, Date, and Fiscal year for the first journal that printed on that report (this will be the posting to the “highest” period). Once that first journal is posted, you’ll be prompted with a message like the one below to let you know that the Post to General Ledger option has to be run again.

How MSI Payroll posts to the General Ledger Version 6.0