Check line distribution methods

Distribution methods determine how accrual distributions are automatically calculated for certain check lines. ActivityHD supports four distribution methods: By Source, Follows Pay, Manual, and Split Period.

Distribution methods

By Source

The "By Source" method calculates the distribution result by multiplying the distribution source amount by the check line's effective rate:

Distribution Source * (Check Line Result / Check Line Source)

As changes to the check line results occur during the normal check calculation, the distribution results are automatically recalculated. Rounding errors are spread across distribution lines so that the total of distribution results will equal the check line result when the total distribution sources equal the check line source. Because ActivityHD automatically calculates distribution results, the Result fields are protected and cannot be changed by the user.

Follows Pay

The "Follows Pay" method automatically generates distributions for selected PRCodes in the same proportion as the distributions for a selected group of other check lines.

Example

Suppose you want to track payroll expenses by project in the general ledger.

First, designate the project(s) on each of your pay lines. You would typically do this in your time and attendance software or in ActivityHD time sheets, indicating the hours worked on each project. Alternatively, you can distribute a pay line manually (based on hours or dollars) on the Distribution tab of the Check window.

After projects are designated on pay lines, use "Follows Pay" to allocate additional payroll expenses (employer-paid taxes and deductions) to the same projects in the same proportions as the pay line distributions. This allocation is always based on dollars paid. For example, the amount of employer-paid Medicare distributed to a project is total employer-paid Medicare times the ratio of project dollars to total pay dollars.

To use "Follows Pay":

  1. Create a check line group(s) and assign the segment items that represent the pay you want the distribution to "follow". It's typical to have one group with most of the "pay" segment items.
  2. On the segment items that you want to "follow pay", set the Follows Pay Group field to the check line group you created in step 1. These are typically segment items which represent employer-paid taxes and deductions.
  3. Ensure that the account number in the Debit Account (Accrual) field on the segment items you assigned the group to in step 2 has wildcard characters (?) in the appropriate positions. When follows pay is processed, the wildcards will be replaced with the corresponding values from the source distributions to provide the GL accounts for the distribution.

With the "Follows Pay" method, you cannot edit distributions for the check line directly. Instead, distributions are automatically updated as changes occur to the check line and to related pay lines (from the "follows pay" group). To override the system-generated "follows pay" distributions, you must select a different distribution method.

The "Follows Pay" distribution applies GL dates from pay distributions. If you are distributing pay lines by project and by date, the employer-paid check lines will also be distributed proportionately to the same projects and GL dates.

Manual

The "Manual" distribution method does not attempt to calculate distribution results. Instead, you distribute the source amounts and result amounts as needed. ActivityHD ensures that the total distributed results equal the check line result when you try to save the check.

Tip

When you're entering a manual distribution line, you can select Tools > Distribute Result or press Ctrl+B to automatically distribute the remaining source and result to that line.

Split Period

The "Split Period" method allocates payroll expenses when a payroll period spans two GL accounting periods. You designate that a run type allows split period allocations on the run type record. You define the allocation ratio for a split period on a payroll run created with a run type that allows split periods. You do this by indicating the number of work days in the pay period which fall in each accounting period.

You can modify the GL account on a split period distribution, but you cannot change other field values. Moreover, you cannot add to a split period distribution or delete a split period distribution.

To use "Split Period":

  1. Create a run type with the Split Period checkbox marked.
  2. Create a payroll run for a period that spans two GL accounting periods using the run type created in step 1. ActivityHD finds the GL accounting periods using the control calendar from the liability account designated on the run type. If the liability account doesn't specify a control calendar, the default calendar is used instead.
  3. Enter the number of work days in the pay period which fall in each GL accounting period.

When the "Split Period" method is used, ActivityHD automatically generates two distributions: one that is dated as of the previous GL period end date and one that is dated as of the pay period end date. The ratios of work days in each period to total work days are used to automatically distribute the check line's source and result to the two distribution lines.

Example

Suppose an employee's pay of $1,000 is for a pay period with 10 working days where 6 work days fall in September and 4 work days fall in October. The split period method would record $600 of pay to September 30 and $400 to October 4 (assuming October 4 is the pay period end date).

Note

Some companies record exact dates for when work occurs along with the hours worked, resulting in 10-12 pay lines on a check, each with a different work date. In this case, the split period method is unnecessary since the accrual entry contains the exact dates of work.

Additional notes about distributions

  • Distributions which have already been merged in GL cannot be changed or deleted. If necessary, you can add more distributions to correct previous distributions. The additional distributions will be summarized into a separate unmerged GL entry.
  • When time sheets are processed, the check line's distribution method is "By Source" if the summarized time sheet lines allow ActivityHD to calculate the result amount. If, on the other hand, the time sheet lines designate a result value, the distribution method will be "Manual" and the distributions will provide the summarized result amount from the time sheets.