Recording the Journal Entry
Once your payroll information is properly grouped, you can easily transfer the information to your accounting general ledger with a journal entry. Print a hardcopy of the payroll information for a payroll run and next to each grouping, pencil in the general ledger account associated with the expense. Be aware that not every item on a payroll report always represents an increase, or debit, to an expense account. For example, if you withhold the employee’s portion of insurance costs from payroll, those amounts will represent a decrease, or credit, to insurance expense account.
When you have identified each total amount and the proper general ledger account for posting, enter all the amounts, positive and negative, into an adding machine. The net amount should equal the total amount deducted from your operating account for the payroll processing. If the net amount does not equal the amount deducted from your operating account, you have made a mistake in entering the information in the calculator or have failed to identify and label an account on the payroll report. Review your data and repeat the process until the net payroll equals the operating account deduction.
Once your payroll entry is in balance, post a journal entry to your accounting general ledger, starting with the decrease, or credit, to your operating bank account. When you have completed your journal entry, the debits and credits should equal. Print a copy of the posted journal entry for your records and attached the payroll report for backup.