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Payroll Journal Entry Overview

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Payroll Journal Entry Overview

The Payroll Journal Entry window is used to record the journal entry from your outside payroll provider and at the same time ‘true-up’ the labor accrual entries that were created from the POS import each day of the pay period. Labor accrual entries are made from two sources: hourly wages through the POS integration by way of Job Titles and salaried wages through set daily accruals amounts on the Location setup.There are two unique fields on the Payroll Journal Entry transaction that set it apart from the normal Journal Entry transaction. There is a place to enter the start and end date of the payroll period and there is a third tab on the grid called ‘Payroll Estimate Clearing’. When entering your payroll journal entry (from your outside payroll provider), enter the start and end date of the pay period in the Payroll Start Date and Payroll End Date fields. Make sure your transaction date in the header of the transaction is the same as your Payroll End Date.
PayrollJE1
Next, import or enter the full payroll entry (as given to you from your outside payroll provider) on the Details tab.  See the Journal Entry Import function for more details on importing journal entry details.
Then hit Approve in the ribbon above.
The Payroll Estimate Clearing tab will calculate and display the sum total of all the Approved labor accrual entries made by the POS integration (via the DSS) between the start and end date of the payroll period. Notice that it is essentially a single reversing entry on the last day of the payroll period. The difference between the reversing entry and the actual payroll entry (from your payroll provider) is shown on the Distribution tab. The amounts shown in the Distribution tab are the net impact to your labor related GL accounts.
Location or Legal Entity – This clearing can either happen for the specific location selected in the Journal Entry header, or if your company does 1 payroll entry per legal entity then it can clear all locations for the Legal Entity in the same entry.  To set your preference, open Preferences (Administration – Preferences in top ribbon) and on the 1st tab set the Payroll Clearing field to either “Per Location” or “Per Legal Entity”.
PayrollJE2***Special Note: Be sure to Approve all the DSS (Daily Sales Summary) records for the pay period prior to entering and approving the Payroll Journal Entry, as the Payroll Journal Entry window will only create a reversal for Approved labor accrual entries on DSS records. If you accidentally approve (and create the reversal) before approving all DSS in that date range or if changes are made to the labor entries in the POS and you need to re-run the accrual reversing then just Unapprove the Payroll Journal Entry and Approve it again and the accrual reversing calculation will be recreated.
***Special Note: The smaller the amounts on the Distribution tab, the more accurate your accruals have been. If you note that there are large dollar values on the Distribution tab, you may want to adjust some of the accrual %’s on the Location setup. The accrual clearing amounts may also be larger than expected (or off) if the accounts assigned to Job Titles or to the location default accounts are incorrect. For example, the ‘Cook’ Job Title might incorrectly be assigned to FOH Labor in R365 but actual payroll entry from your outside payroll provider books the ‘Cook’ labor to BOH Labor so the amount shown on the Payroll Journal Entry Distribution tab would show the full amount going into BOH Labor and then the full amount coming out of FOH Labor. Therefore, be sure to review Job Title setup if the amounts on the Distribution tab are larger than expected.

 

Payroll Journal Entry Field by Field

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Date – This is the date of the Journal Entry. It defaults to the current date. For Payroll Journal Entries, it normally should be changed to the last day of the pay period for which the transaction is being recorded.

Number – This is a system generated unique number assigned to this Journal Entry. Normally, you would not change this number.

Location – This is the location for which you want to assign this payroll journal entry. For Payroll Journal entries, this is normally the ‘Corporate’ location for the legal entity that owns the checkbook from which the payroll funds are withdrawn. (Then, the individual payroll expenses are broken down by specific locations in the journal entry below in the details grid.)

Comment – This is an optional comment field.

Payroll Start Date – Enter the first day of the pay period for which this journal entry is being entered.

Payroll End Date – Enter the last day of the pay period for which this journal entry is being entered.

PayrollJE4

Details – Enter the full journal entry transaction as provided to you by your outside payroll provider.

Distribution – One you have selected the Payroll Start Date and Payroll End Date, and entered the full journal entry on the Details tab, you will be able to see the ‘Net’ effect of this payroll journal entry to your GL accounts on the Distribution tab. The reason why this is not simply the values on the Details tab is because this transaction is also creating a reversing entry of all the labor accruals that have been made. Therefore, the Distribution tab displays the difference between the full payroll entry for the period and the reversing (or ‘Clearing’) entry of all the accrual entries for the period. ***Special Note: The values displayed on the Distribution tab should be relatively small if your accrual %’s are accurate. You can adjust the labor accrual %’s on the Location setup. Also, if your Job Titles are assigned to the incorrect GL Accounts (as described above), they may also be larger than expected.

Payroll Estimate Clearing – This tab displays the reversing entry of all the labor accrual entries made by the POS integrations once the transaction is Approved. ***Special Note: Keep in mind that the individual daily labor accrual entries are not lost. The Payroll Clearing Entry makes a single reversing transaction on the date of the payroll journal entry for the sum total of all the accrual entries for the payroll period.

Another Sample Payroll Journal Entry

After running payroll through your payroll provider, either import (or enter) a journal entry that has the summary of the expense accounts (i.e. FOH, BOH, Manager etc.) and a single line for each employees net pay (i.e. the amount that will clear the bank – each check) into Restaurant365. By doing this, we can use Restuarant365 for Bank Reconciliation for the payroll account and also capture the actual payroll expenses.

Sample Entry for each check run using an example of 3 locations (having one of your locations as a ‘Corporate’ location where executive and administrative salaries would be booked). The amounts credited to the Payroll Checking account below automatically create R365 Bank Withdrawal entries that show up on the R365 Bank Reconciliation and are auto-reconciled when you import your bank activity into Restaurant365:

Debit $1,000 FOH Hourly Wages Expense – Location A

Debit $1,000 FOH Hourly Wages Expense – Location B

Debit $1,000 BOH Hourly Wages Expense – Location A

Debit $1,000 BOH Hourly Wages Expense – Location B

Debit $1,000 Administrative Salaries Expense – Location Corporate

Debit $500 Taxes/Benefits/Insurance – Location A

Debit $500 Taxes/Benefits/Insurance – Location B

Debit $500 Taxes/Benefits/Insurance – Location Corporate

Credit $500 Payroll Checking Account – “Jane Doe” “Check 1123”

Credit $500 Payroll Checking Account – “Steve Smith” “Check 1124”

Credit $500 Payroll Checking Account – “Kobe Bryant” “Check 1125”

Credit $500 Payroll Checking Account – “Tim Duncan” “Check 1126”

Credit $500 Payroll Checking Account – “Steven Smith” “Check 1127”

Credit $500 Payroll Checking Account – “Parley Pratt” “Check 1128”

Credit $500 Payroll Checking Account – “Dan Jones” “Check 1129”

Credit $500 Payroll Checking Account – “Brittany Spears” “Check 1130”

Credit $500 Payroll Checking Account – “Elton John” “Check 1131”

Credit $500 Payroll Checking Account – “Steve Wonder” “Check 1131”

Credit $500 Payroll Checking Account – “Jim Kaa” “Check 1131”

Credit $500 Payroll Checking Account – “Carl Karcher” “Check 1131”

Credit $500 Payroll Checking Account – “Summer Harris” “Check 1131”

The entry will have a single row for each check sent out (the credits) and will have a row for the total expense by GL Account by Location (the debits). After running your payroll just as you do today, you can either prepare this entry in Excel and import it into Restaurant365 or create a Memorized GL Transaction in Restaurant365 and then each pay period you would need to simply update the $ amounts and the check numbers in the comment for each row (this is done easily in Restaurant365 as the journal entry screen is like an Excel spreadsheet.)

Lastly, Restaurant365 takes this entry and uses it to offset the labor accruals that come in daily from your POS system into Restuarant365. So when you enter this journal entry above (or import it), you select the start and end date of the pay period for which it covers. The system then makes an adjustment to true up/down the accrued payroll expenses for the pay period. This way you get the benefit of having your weekly prime cost reports and having them totally accurate however often you run actual payroll.

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