Reconciling Batch Payroll Journal Entries in GLS

Last reviewed: 12/22/2011
Article ID: R10950

The information in this article applies to:

• Tabs3 General Ledger Software (GLS) Version 16, 15, 14, & 12

Summary

Often, firms will be set up to post batch journal entries for payroll instead of separate journal entries for each check. The actual checks that make up the lump sum may clear the bank at different times. This poses a problem when trying to reconcile the batch journal entry with the bank statement. For example, some checks may clear the bank near the end of a bank statement period; while other checks clear the bank a little later and are included on the next month's bank statement. This article discusses solutions for dealing with batch payroll journal entries in the GLS Reconciliation program. 

Solutions

The following is a list of possible solutions for reconciling batch journal entries in GLS. These solutions should be regarded as general guidelines and not as the only possibilities.

• METHOD 1:  Do not post batch journal entries. - Instead of posting a batch journal entry (i.e., credit cash for the net amount of all payroll checks), make a separate journal entry to credit cash for each payroll check. This method is easy to reconcile, but includes journal entries for each payroll check. If desired, you can omit the employee name from the description field. When the bank statement arrives, you will mark the cleared payroll checks in the Reconciliation program as cleared, along with the other cleared checks.
• METHOD 2: Continue to post batch journal entries. In addition, make a single reversing journal entry to debit cash and individual journal entries to credit cash for the amount of each payroll check. - Post the batch journal entry for the entire amount to cash (i.e., credit cash for the net amount of all the payroll checks) along with the other payroll journal entries. From your payroll report, make another set of journal entries where you debit cash for the total net amount of all payroll checks and make a separate journal entry to credit cash for each payroll check using the payroll check number. Manually mark both batch journal entries to cash as Reconciled (i.e., in the Journal Entries window, select the Reconciled check box). This method is easy to reconcile, but includes journal entries for each payroll check. If desired, you can omit the employee name from the description field. When the bank statement arrives, you will mark the cleared payroll checks in the Reconciliation program as cleared along with the other cleared checks.
• METHOD 3: Continue to post batch journal entries. In addition, make a single reversing journal entry to debit cash and two journal entries to credit cash: one journal entry for the cleared portion of the payroll and one journal entry for the outstanding portion of the payroll. - Post the batch journal entry for the entire amount to cash (i.e., credit cash for the net amount of all the payroll checks) along with the other payroll journal entries. You will then need to make another set of journal entries after you receive your bank statement. When you receive your bank statement, you will need to determine the actual amount that cleared the bank. Once this is determined, make a reversing journal entry to debit cash for the total net amount of all the payroll checks (i.e., the same amount from the original credit journal entry to cash). You will then make two journal entries to credit cash, one journal entry for the portion of the payroll that cleared the bank and one journal entry for the portion that is still outstanding. Use the same date for the new journal entries as the date used for the original payroll journal entries. Manually mark the original journal entry and the reversing journal entry (made to the cash account) for the full payroll amount as Reconciled (i.e., in the Journal Entries window, select the Reconciled check box).  When performing the reconciliation, you will also mark the journal entry for the amount that cleared the bank as cleared.

  The journal entry for the amount that did not clear the bank will remain outstanding until the next reconciliation. When reconciling the next statement, if the entire amount of the adjusting journal entry did not clear the bank, you will need to repeat the above process. (i.e., make a reversing journal entry for the entire amount of the journal entry that did not clear the bank. Then, create two new journal entries with a date of the original journal entry, one journal entry for the amount that cleared the bank and one journal entry for the amount that is still outstanding.) 
  
  This method has the advantage of not including separate journal entries for each payroll check; however, it complicates the reconciliation process where you need to determine which portion of the payroll has not cleared the bank and deal with it the following month as well.

• METHOD 4: Continue to post batch journal entries but finalize with a difference other than 0.00.
  
  Note:  This method is not recommended for the following reasons:  
  1. There is no audit trail.
  2. Next month, you will receive a message that the statement beginning balance and the calculated beginning balance do not match.

  If you decide to use this method, when you start the next reconciliation, a message indicating that the statement beginning balance and the calculated beginning balance do not match will be displayed. You can ignore this message as long as the difference between the amounts displayed in the message is the same amount as the difference in last month's reconciliation. If these amounts are not the same, KB article R10904, "GLS Reconciliation Troubleshooting", may be helpful to troubleshoot why they do not match.
  
  This method complicates the reconciliation process since you need to determine why the "statement beginning balance and the calculated beginning balance do not match" message is displayed when you start the next reconciliation. Furthermore, this method makes it difficult to have more than one person reconcile the bank account. The only way for another person to know that the reconciliation was finalized with a difference other than 0.00 is to refer to an optionally printed Reconciliation Report, or plug last month's figures in the Reconciliation Settings window (i.e., Statement Date, Beginning Balance and Ending Balance) and start the reconciliation. Additionally, an outstanding payroll amount will probably have to be dealt with each month.

References

• R10904 - GLS Reconciliation Troubleshooting

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