What this does
The journal for a pay run splits the run into categories. Each category has a debit account and a credit account in your mapping. This article says what each category holds.
The categories
- Wages. Gross earnings: salary, hours, overtime, vacation pay and bonuses.
- CPP payable. CPP and CPP2 withheld from employees, owed to the CRA.
- EI payable. EI premiums withheld from employees, owed to the CRA.
- Income tax payable. Federal and provincial income tax withheld, owed to the CRA or Revenu Québec.
- QPP payable and QPIP payable. Withheld from Quebec employees, owed to Revenu Québec.
- Vacation pay payable. Vacation pay earned and not yet paid out.
- Taxable benefits. Benefits the employer pays for, such as group insurance premiums.
- Employer CPP, Employer EI, Employer QPP, Employer QPIP. The employer's own contributions and premiums. Employer EI is 1.4 times the employee's, or the reduced rate.
- Employer matches. What the employer adds to a deduction, such as an RRSP or pension match.
- Employer health tax, Workers' compensation and Health Services Fund. Employer levies.
- Net pay. Take-home pay owed to employees until the deposits and cheques clear.
- Deductions payable. Other deductions withheld and owed to their payee: union dues, RRSP and garnishments.
Why it balances
Gross earnings equal withholdings plus net pay. If they do not, the app refuses the export and says so.
Vacation
Vacation payable is signed. Accrual debits vacation expense and credits vacation payable. Pay taken out of a dollar ledger does the reverse, and the earnings line debits wages again. Hours policies post nothing.
Good to know
- An earning or deduction that has its own ledger account posts there instead of its category's account.
- The employer match posts to employer match expense.
- A reversal run posts the opposite entries.