October 30, 2016 admin

Cash in Bank—Payroll

Assets

CASH IN BANK—PAYROLL ASSET ACCOUNT
1002

ACCOUNT EXPLANATION
Cash on deposit with the bank in the dealership’s payroll checking account maintained on an imprest basis.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Establish minimum balance in payroll account CD
    Cash in Bank—Payroll 1002
      Cash in Bank—General 1001
             
  Transfer general funds to payroll account to cover total net payroll CD
    Cash in Bank—Payroll 1002
      Cash in Bank—General 1001
             
   Net amount of payroll checks issued to employees PR
    Accrued Payroll 2410
      Cash in Bank—Payroll 1002
COMMENTS
  • Use of a payroll bank account simplifies the bank reconciliation procedure by separating payroll checks from general fund checks, and facilitates maintenance of disbursement records by more than one employee.
  • A deposit equal to the total net payroll amount should be made in this account for each payroll.
  • A check protector should be used in preparing payroll checks.
  • Bank reconciliations should be prepared immediately upon receipt of the bank statement and canceled checks each month. Imprinting an expiration period on the payroll check form will assist in minimizing the number of outstanding checks.