How do payroll journal codes work?

Payroll Application

The payroll journals include the PC (Payroll Journal), PB (Payroll Benefits), CDP (Cash Disbursements - Payroll), and CDPT (Cash Disbursements - Payroll Transmittals). Learn how the payroll journals work, find out which amounts are posted to each journal, and follow an example that shows you how amounts are posted.

In this Topic

How do payroll journal codes work?
1. Payroll journal codes
2. Example: Posting amounts to the payroll journal

Payroll journal codes

For most organizations, there are four journals in the general ledger that summarize the payroll information. Each journal contains specific information.

PC, Payroll Journal

Records the employee side of the payroll liabilities and expenses.

PB, Payroll Benefits

Records the employer side of the payroll liabilities and expenses.

CDP, Cash Disbursements - Payroll

Records the paycheck transactions.

CDPT, Cash Disbursements - Payroll Transmittals

Records the payment of the other payroll liabilities, for example, health insurance and IRS tax deposits.

Example: Posting amounts to the payroll journal

John Smith is paid $2,000.00 each payroll. Of this amount, $100.00 is withheld for insurance (employer portion is $250.00), $100.00 for Federal taxes, $50.00 for state taxes, $50.00 for retirement (employer match is $75.00), and $141.53 for Social Security and Medicare.

PC (Payroll) journal

The PC journal is posted to the general ledger, like this...

	Debit	Credit
Salaries and wages expense	2,000.00
Wages payable		1,558.47
Insurance payable		100.00
Federal taxes payable		100.00
State taxes payable		50.00
Retirement payable		50.00
Social Security and Medicare payable		141.53

The gross amount of the payroll is posted to the expense account on the debit side. The deductions are recorded as liabilities (credit) with the net pay allocated to wages payable (credit). The payroll journal transactions are created when you create the payroll by running

Enter Payroll Checks
Pay by Exception
Enter Manual Checks
Enter Supplemental Checks
Any routine that creates the employee's payroll check.

PB (Payroll Benefits) journal

The PB journal is posted to the general ledger, as follows...

	Debit	Credit
Insurance expense	250.00
Retirement expense	75.00
Social Security and Medicare Expense	141.53
Insurance payable		250.00
Retirement payable		75.00
Social Security and Medicare payable		141.53

The PB journal is the benefits side of the payroll, also known as the employer match. The benefits side is created by running Calculate Benefit Amounts. It consists of the amounts the employer has agreed to pay for heath insurance, retirement, Social Security and Medicare matching, and so on. The expense is debited to the appropriate expense account with the offset to the corresponding liability account, which depending on each individual site, may or may not be summarized.

CDP (Cash Disbursements - Payroll) journal, paycheck

The CDP journal records the payroll paychecks. It will post this transaction to the general ledger.

	Debit	Credit
Wages payable - John Smith	1,558.47
Cash account		1,558.47

The CDP journal posts each check separately to the liability account and then posts a summary entry to the cash account.

Note: The amount paid is the net amount of the payroll created in the PC journal. The reference number in the liability account is the check number. If the example used more than one employee, you would see wages payable debited once for each payroll check created.

CDP (Cash Disbursements - Payroll) journal, direct deposit

If the payroll check is a direct deposit, the CDP journal will look like this (where DD is Direct Deposit)...

	Debit	Credit
Wages payable - John Smith DD	0.00
Wages Payable - DD total	1,558.47
Cash Account		1,558.47

With Direct Deposit (DD), the CDP journal will

post a zero check to the liability account for each direct deposit employee,
post a summary entry for the direct deposit total for all direct deposit employees to the liability account, and
post the summary entry to the cash account

CDPT (Cash Disbursements - Payroll Transmittals) journal

You can use the Payroll app or the Accounts Payable app to pay payroll transmittals.

If you're using payroll transmittals, the CDPT journal will post the following transactions to the general ledger...

	Debit	Credit
Insurance payable (employee and employer)	350.00
Federal taxes payable	100.00
State taxes payable	50.00
Retirement payable (employee and employer)	125.00
Social Security and Medicare payable (employee and employer)	283.06
Cash account		908.06

The CDPT transactions are created when transmittals are paid in payroll. The CDPT journal is created by

running Calculate Transmittal Amounts, and
printing Transmittal Checks

The CDPT journal will post all of the deductions, benefits, and employer matches into common buckets to be paid.

If you're using the Accounts Payable app to pay transmittals, the CDPT journal will post the following transactions to the general ledger...

	Debit	Credit
Insurance payable (employee and employer)	350.00
Federal taxes payable	100.00
State taxes payable	50.00
Retirement payable (employee and employer)	125.00
Social Security and Medicare payable (employee and employer)	283.06
Accounts payable		908.06

Remember, if you're using the Accounts Payable app to pay transmittals, you will need to create transmittal invoices. When you create transmittal invoices, Connect will clear out the payroll liability accounts and create an accounts payable liability, also known as an invoice for each transmittal.

When payment is received in the Accounts Payable app, Connect will create the following entry in the CDA (Cash Disbursements) journal and then it will be updated to the general ledger.

	Debit	Credit
Accounts Payable	908.06
Cash account		908.06

Each check is posted separately to accounts payable. The check number is the reference number, just like the check number is the reference number in the CDP journal and CDPT journal.

2019.05, 2019Jul03