In this presentation, we will record a transaction related to salaries expense into our accounting system. Get ready, because here we go with aplos. Here we are in our not for profit organization dashboard, we’re going to jump on over to our Excel file to see what our objective will be here, we’re going to be in tab number six, tab number six, where we have our transaction. Here we are in our not for profit organization dashboard, we’re going to be jumping on over to Excel to see what our objective will be, we’re going to be in tab number six. So we’re in tab number six, we’re going to be recording the salaries expense.
Now note that if you’re going to be processing payroll through the system, that’s going to be an added level of difficulty, we’re not going to go through the actual payroll process. within the system, we’re just going to enter the transaction related to it like any other basically type of expense. If you want, if you want to learn more about payroll, we do have a course on payroll and how the payroll transactions work. But that’s a whole nother course in of itself to be processing through the payroll. However, if you think about the payroll for a normal type of business, and for not for profit, you have pretty much this many of the same kind of concerns about it with regards to withholdings federal income tax, state income tax, Social Security, Medicare types of withholdings on that, so and you can also think about doing that either through the the accounting system, recording it into the accounting system, or seeing if you have a third party, which is common as well to help you out with the payroll, if you have the payroll for it.
And that could be done the bigger companies or something like an ADP, or a paychecks, which would be a third party that could help the process the payroll and then you’d still have to enter that data in some way shape or form into your accounting system. So if we were to simplify the payroll transaction down to you know, its bare its basis, and not think about the withholdings and all that kind of stuff, then typically, you would just simply have salaries expense, being the expense, and then the credit to cash. So for the purposes of our practice problems of record the expenses, that’s what we’re going to be recording. So we’re just going to record a straight transaction, you can kind of think of it as if we had a third party like an ADP or paychecks. And then we’re taking that information putting that into the system with a straight journal entry for us.
Again, not considering the the withholdings here, then we’re also going to enter basically our adjusting entry, this is something that you would typically do at the end of the month, in our case, the end of January, where you’re going to say okay, there’s some portion of the period that work was done for which payment wasn’t made. Because payroll will typically be done on a more of a cash basis on a payroll basis, rather than on a strict accrual basis, meaning you get paid every two weeks or paid every week, bi weekly, weekly, semi monthly. And that means that the pay date or when you’re going to record, it’s not going to line up with the cutoff date into the month or year. And therefore there’s going to be time that the workers worked for which they had not yet been paid, but are going to be paid in the following period.
And therefore, we should have an adjusting entry at the end of the time period, which will make it easier for the payroll to be to be processed and not have to worry with the added timing problem, as well as make the financial statements correct as of the cutoff date. All right. So let’s record the first one first kind of a standard type of journal entry here, as we’re going to record it, we’re going to go back on into our system system back into aplos. So let’s go then to the accounting fund and accounting, we’re going to enter a transaction. Now the easiest way to enter this transaction, because cash is affected will most likely be to use a register type of format.
So we’re going to go kind of just directly into the register here. So we’ll go into the register, we’re going to save the date of this transaction is going to be the sixth of January. So let’s bring it on back to January, January, number six. So let’s bring that and then I’m going to tab through this. So the payee, I’m going to say is employee, whoops, I’m going to add this employee he won. So that’s going to be our employee. And again, I’m going to record like in the entire payroll as if it’s one transaction here. So again, you can you can imagine multiple people getting paid with multiple with multiple transactions, possibly that will look similar. And then you might have a comment could be something like payroll, the amount is we’re going to be putting the 209460 so 209460 and the deposits not a deposit, check.
Now if it’s a check number, you can assign the check number here, and then you can go to the printing feature. Notice there’s a printing feature here. If you’re going to print checks, then what you would have to do is get the pre printed checks, you’d put them into the printer, and then you’d have to make sure they’re lined up correctly and what Not the checks would already have the cheque number on it. So if you’re going to print it, or if it’s something that has already been processed, we’re imagining it’s processed by like an ADP or paychecks electronically. And now we’re entering it into our system here. So we’re not going to have the check number. And then we’re going to save the account, we’re looking for an expense account, and we have the salaries. So salaries looks good, we’ll pick that one up.
Now, if it wasn’t salaries, if we’re saying it’s some other kind of payroll, we could go to the register and change that maybe I just wanted to be called wages or something, maybe they’re not salaried pay. But we can do that I would pay, I would use whatever accounts accounts are given to us. And then if we want to tweak the name for them, we can do so. So then the fund that we’re going to have is going to be unrestricted. So we’re going to go unrestricted. Now, note that most of the expenses, the way we’re going to format, this will be going into the unrestricted and, and that’s going to be because if we pay, if we paid something out, that’s going to trigger the release of funds or assets from a restricted to unrestricted, we will record that release happening with a transaction. So we’ll show the release going from a restricted to an unrestricted category, and then the expense being in the unrestricted category.
So that’s how we’re gonna, that’s how we’re going to be setting this up. So then we got so that means that pretty much all the expenses, all the expenses, then will be in the unrestricted category. And if we need to unrestricted, we’ll do that with a transaction, we will see that at a later time. So then we have the unrestricted further tag, we’re not going to add that now, we will be going back in now note, if I go back to our system here back into Excel, notice now we’re entering the expenses, we do have a requirement to enter these expenses in two ways. In essence, when we have the statement of activities, which we’re showing here, by function, what we use them for, meaning the programs, and then the general admin and the fundraising. And then we need to break them out further by what their objective is, or their nature, which is what you would normally think with expenses. So rent, salaries, telephone, so on.
Now, we could put all this in one report technically, but again, that would be overwhelming to the reader. So what we want to do is create a report with like one or the other of these types of formats, and then break out another report kind of like this, which will break out this information for the expenses by what they are used for, in order to break them out to what they are used for such as programs like education, community service, and the admin or management in general and fundraising, we will need to be using some type of percentages that we will have to determine. So what we’re going to do now is we’re going to enter all this information at this point, I just just into the system without breaking that out.
And then we’ll go back in and show you how to break that out. And that might be an easy way to to do this kind of breakout because then you can kind of Britain you can separate and specialize the duties between entering the the expenses, and between breaking out the expenses to the various categories they need to be broken out into. Also note that the salaries here we have the one line item, if we need more than one line item, then we can hit the Split button. So I can say we want to hit the Split button. And that’s going to give us some more line items. So now we of course we know that this is the checking account, this is basically a register, this will be decreasing the checking account, the other side will be going to the expense account here. And if we needed to add then another expense account, we can do so by adding another expense account below.
Alright, so let’s go ahead and submit it. So we’re going to submit, then we’ll jump on over to our financial statements, our reports. So we’re going to go to the reports to the upper right, we’re then going to go into the balance sheet and income statement. The special ones, the fun ones, however, because yes, they’re more fun, because they’re fun to ones. And then we’re going to go back up top and right click on that tab, we’re going to duplicate that tab, duplicating the tab going back to the tab the left going back to the reports to the right at the top right, then we’re going to open the other report, which is going to be the income statement the income statement by fund income statement by fund going back up top right clicking on that report, let’s duplicate that report.
Now we got the balance sheet, we got the income statement, then we got another tab that we can do stuff on. Let’s go back on over to the balance sheet, then adjusting the date. And we’re going to bring it on back to January January 31 January 31. So there we have that, and we have entered our transaction, decreasing the checking account. So I would also add our we’re going to go to the report layout and I like to add that total column. So I’m going to say add the total column and apply. Now note this is also something that’s pretty much a default that i would i would like to have most of the time with the total there. So I could say I’d like to save this and I’m going to save this As a custom balance sheet, by fund report, so balance sheet by fund report.
And we may, we may want to do where we will do further customization to it at a later point. So, but just note, so I’ll actually not save it at this point in time. So we’ll talk about that later. But just note you any changes that you make, you could you could save the report. And then you might even want to think about having saved reports, in terms of internal reports, reports that you’re going to be jumping into all the time like this, which can be more like worksheet type of reports. And then you can have and i know i misspell custom, but I’m not going to save it, so it’s okay. And then you can also have the external reports, the ones that are as close as good as possible that you can then give to somebody else for the external reporting.
And any kind of last minute changes you need to do, then that you can’t do in the accounting system, you can do by exporting it to excel. So we’ll talk more about that recording in the future. But in any case, there’s the total column here, then we’re going to go into this item. So if we go into the to the checking account, we’re going to so I went into the unrestricted portion, there’s the 209 460. And there is it’s a check type of form because we entered it into the register as a decrease. So a check type of form. Let’s go back, I’m going to go back on over to them our balance sheet, let’s then go to the income statement. So if we take a look at the income statement, we want to we want to see it for the year to date. So this year to date, that’s what we would like to see, then let’s hit the old drop down on the right, let’s see the total column, I’d like to see the total column. So we’ll say there that is. And now we have our expense down below. So we’ve got our expenses, the rent, and now the salaries.
So there is our salaries expense. Now, note that this is in the unrestricted column, we don’t have it yet broken out by the tags in the unrestricted column, we will do so. And once we do, we will then go back on over here, I’m going to go to the to the last tab, I’m going to go to the reports drop down. So we’ll go to the reports. And then we will be running our reports going back on down by tag. So now we got the unrestricted income statement. So just keep visualizing how this is going to work, we got our income statement broken out between our funds, restricted and unrestricted. And then we’ll have our fund totals down here that you could see the fund totals, and then we will be considering that information with regards to the further breakout by tag.
So then if we go to our tags, then we will have the the income unrestricted, which will tie out to the unrestricted column, and the income statement restricted which will tie out to the restricted columns. So that’s kind of a hierarchy, you want to just start to visualize in your mind and just repeat, visualizing in your mind. So now we’re going to record the second item, we’re going to go back to the first tab, and this is going to be an adjusting entry. So we’ll get it we’ll get used to and we’ll be able to then now record something with a journal entries, I’m going to go back up top, we’re gonna go back up to our second transaction here, and which is going to be the adjusting entry.
Now there’s no cash affected here. And this is an adjusting entry, which typically would be done with a journal entry. This is something that you might have like an accounting department or something due at the end of the period or the end of the year to be more on like an accrual type of basis. So we’re going to go back on over and I’m going to say, All right, now we’re going to go to the accounting. And once again, we’re going to be recording another transaction, but this time, not with the register but a journal entry. So we have to, we have to go back to basically the debits and credits at this point. Now I’m going to make this one as of the end of the year, because that’s when the cutoff date, that’s usually when we enter this information as over.
So we’ll put January 31. In the memo, I’m just going to put an adjusting entry, something like that for you know, wages. And then we’re going to say that the wages account or we put it as salaries, salaries here is going to be debited, it’s going to be in the unrestricted, that’s correct. And then we’re going to not have we could have a note which is a DGA and tree, and then the debit is going to be 416 801 6800. And then we’re going to have the other side been the it’s going to be a payable account like salaries payable or something like that. Now it’s unlikely that we’re gonna have a salaries payable in the drop down here, so we’re going to have to add an account. To do that. Let’s jump on over to another tab.
So I’m going to right click on this tab up top again. I’m going to duplicate this tab, and then we’re going to go to the chart of accounts. We’re going to go to the fund and accounting. We’re going to go to the accounting drop down we’re going to go to the accounts list. So we’re in the account list. Now within the account list, we need a liability type of account. So we need something in the liability section here. And it’s going to be a current liability. So I’m going to hit the old plus button, it’s going to be something under the accounts payable. So it’s got to be in the numbering system between 21 00 and 2500. So how about 21 520 150? So we’ll say 2150. And then the type of account, do we want to use a register? No, I don’t think we need to register. And then I’m going to say the name is going to be the wages payable. And you could have accrued wages or accrued salary or salaries payable.
However, I’m also going to change the this salaries expense, just so you could see how to change that as well. activity, we’re going to say operating, investing and financing, I’ll keep it in the operating. And then we’re going to say the status enabled sub accounts. No, so I’m going to say save on that, then it’s going to reorder it within our category according to the account number. So it’s reordered by the account number within the category, let’s also make the change while we’re here to the expenses down below, let’s go to the expenses down below where were we had salaries expense and still have salaries expense, but are now changing it by selecting that salaries expense, and we would, we would like to call it wages wages is what we were used to.
So we’re gonna say that’s what we want. So I’m gonna say save that. Alright, so that should change that when we already have something posted to it. That’s okay, we didn’t delete the account, it’s still there, we just changed the name for it. So then we’re going to go on back on over to the first tab, we’re then going to be selecting the drop down and we want to go on down to the liabilities now where we have wages payable, that’s going to be the other side. I’ll put it into the unrestricted, let’s keep it at the unrestricted, I’m going to say a DJ entry, credit 16800. So there we have the debits and the credits for our transaction. So we’re just looking at these two numbers up here. Note that we’re not breaking out the salaries again, to the unrestricted tag categories to 2020 2040.
We’ll talk about that later, we’ll be back here at a later point, we’re at the 16, eight debit 16, eight credits, that looks good, this is going to be increasing the salaries expense on the income statement, increasing the wages payable on the balance sheet. So let’s go ahead and say post on that. And then check that out. See if I have interpreted what’s going to happen correctly. Let’s go on back on over here. And to the balance sheet, we’re in the balance sheet and then we’ll refresh the screen. So we are working with fresh reports. So we’re going to refresh the screen. And there we have our wages payable, if I go into that 16 eight, then of course, we’re going to get to our our transaction, you’ll note here it says it’s an adjusting entry.
And in the transaction type, it’s a journal entry. So that transaction type is something I suggest getting used to so you get an idea of what transaction types, do what. So that’s going to be that side and the other side if we go to the income statements going on over to the income statement, by fund and then refreshing that screen. So we’re working with fresh reports, once again, then we’re in the wages notice we changed the name now to wages, because it was it was salaries before, but we preferred wages.
So we changed it. And then we have down here and the transaction type where we have to check and then we have now the journal entry which was our month end adjusting entry. So that’s going to be it for now notice I am giving trial balances. So if you if you have access to the data files, you should have a trial balance where you could check your numbers on the trial balance at any point along the way, if you so choose. That’s it for now. Let’s get out of here.