Labor burden and the general ledger
When you calculate amounts for labor burden during Payroll
Entry or Select for Payroll Entry,
Sage 50 will create distributions to your general ledger. The two accounts
that are debited and credited are specified on the Labor
Burden tab in Job
Defaults. The Labor Burden
Cost of Sales Account will be debited for labor burden; and the Applied Labor Burden Account will
be credited.
Depending on how you process labor burden for your income statement,
these fields will be filled differently. Here are three examples:
- If you want labor
burden to debit cost of sales on your income statement and you apply expenses
for labor such as employer-paid taxes, health insurance, and so on, to
expense accounts, then your Labor Burden
Cost of Sales Account will be a Cost of Sales account and the Applied Labor Burden Account should
be a contra expense account that will carry a credit balance and reduce
expenses. In this way, when you calculate labor burden during payroll
entry, Sage 50 will credit your expense account and debit the cost of
sales, moving labor burden so that it will affect your gross profit.
- If you want labor burden to debit cost of sales and you
already apply tax and insurance expenses to cost of sales when you enter
them, then both the Labor Burden Cost
of Sales and Applied Labor Burden
accounts will be the same, creating a "wash," in which the same
account is debited and credited by the same amount.
- If you
want your tax and insurance expenses to remain in the expense category
of your income statement, then you will create a wash on the Labor
Burden tab of Job Defaults.
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