Affinity Health Services, Inc.
Title of Policy: CHART OF ACCOUNTS—CURRENT
LIABILITIES
Location of Policy: Affinity Files - Policies
Prepared by:
Effective Date: 5/30/96
Revision Dates:
Total Pages: 1 of 5
Attachments:
Approved by:
SUBJECT: CHART OF ACCOUNTS DESCRIPTIONS --CURRENT LIABILITIES
Account Title
Accounts Payable - Trade
Insurance Premium Payables
Real Estate Taxes - Payable
Unearned Revenue
Accrued Interest Payable
Accrued Vacation & Sick Time
Accrued Payroll
Pension Plan Deduction
Life Insurance - Colonial
Colonial Insurance - Pre
PA Unemployment Contribution - Employee
Federal Income Tax Withheld
State Income Tax Withheld
Local Income Tax Withheld
FICA/Medicare Tax
Occupation Tax
State Unemployment Tax Payable
Federal Unemployment Payable
Accrued Payroll
Payroll Garnishment
Credit Union Deduction
Affinity Health Services: Financial Manual/Section 2/3
PAGE 2 OF 5
SUBJECT: CHART OF ACCOUNTS DESCRIPTION -- CURRENT LIABILITIES
Account Description
Accounts Payable - Trade
This Account is a cumulative total of the Accounts Payable for the current accounting
period. This total should tie to the detail aging trial balance of the Accounts Payable
module for the same accounting period.
Insurance Premiums Payable
This Account balance is established when an annual insurance policy is received. A
Journal Entry is made for the annual premium by a debit to Prepaid Insurance and
credit to Insurance Premium Payable. These annual premiums are general setup with
a 25% down payments and 8-10 month installments. When a payment is made on the
premium, it is debited to this account. An Insurance Payment Register is maintained as
a control account detailing all insurance premiums and their current balance due.
Real Estate Taxes - Payable
This Account accumulates the monthly estimated R/E taxes for the current year. All
school, county and local R/E taxes should be detailed in a sub-ledger maintained for
the current year. A Journal Entry is made with a debit to R/E Tax Expense and a credit
to R/E Taxes Payable. When the R/E taxes are paid, this account balance is
transferred to prepaid R/E Taxes and the monthly Journal Entry is continued with a
debit to R/E Taxes and a credit to Prepaid R/E Taxes. The accounts for R/E Taxes
Payable and Prepaid R/E Taxes will have a zero balance at year-end.
Unearned Revenue
This Account is used when a refund is due a resident. The credit flows thru the
Revenue Journal and the debit comes thru the Accounts Payable when the refund is
processed.
Accrued Interest Payable
This Account reflects the accrued interest payable on the SouthTrust Mortgage thru the
end of the month. Interest is regularly billed thru the 17th of the current month by
SouthTrust Bank on their mortgage payment invoice. The Journal Entry is created by
calculating the interest expense for the remaining days in the month. The debit is to
Interest Expense - Capital and a credit to Accrued Interest Payable. This entry must be
reversed the following month, preferably by having the original entry "Auto Reverse".
Accrued Vacation & Sick Time
This Account is established at year-end and adjusted by auditors to account for all
unused vacation and sick time that may be payable to employees.
PAGE 3 OF 5
Affinity Health Services: Financial Manual/Section 2/3
SUBJECT: CHART OF ACCOUNTS DESCRIPTION -- CURRENT LIABILITIES
Account Description
Accrued Payroll
This Account reflects the amount of payroll owed from the date of the last payroll end
date thru month end. The preferred method of calculating this accrual is to use the
Journal Entry from the 1st payroll paid in the following accounting period. This method
takes the payroll and divides by the number of days to the end of the month. The
Journal Entry is a debit to the various P/R Expense Accounts and a credit to the
Accrued Payroll Account. This account must be reversed the following month.
Preferably by having the original entry "Auto Reverse" the first day of the next
accounting period.
Pension Plan Deduction
This Account is credited from the Payroll module for employees enrolled in the 401K
Pension Plan and have deductions made from their pay. When the monthly payment to
the caretaker of the Plan is made, a debit flows from the A/P module.
Life Insurance - Colonial
This Account is credited from the Payroll module for employees who have purchased
Life Insurance from Colonial and have the premium deducted from their pay. The debit
flows thru the A/P module when monthly payment is made to Colonial.
Colonial Insurance - Pre
This Account is credited from the payroll module for employees who have purchased
Accident and Sickness Insurance from Colonial and have the premium deducted from
their pay. The premium is approved under the Cafeteria Plan and qualifies for
exemption from Federal Withholding and FICA/Medicare Taxes, and must be taken into
consideration when calculation is made for the employer's share of FICA and Medicare
liability. The debit flows thru the A/P module when payment is made to Colonial on a
monthly basis.
PA Unemployment Contribution - Employee
This Account is credited from the Payroll module for that percentage of withholdings
from the employee’s earnings for PA Unemployment. This account is a debit thru the
A/P module when the Quarterly PA taxes are computed. Verification of the employees
liability and account balance can be confirmed by the Quarterly Tax Report in the
Payroll module.
Affinity Health Services: Financial Manual/Section 2/3
PAGE 4 OF 5
SUBJECT: CHART OF ACCOUNTS DESCRIPTION -- CURRENT LIABILITIES
Account Description
Federal Income Tax Withheld
The credit to this Account comes from the Payroll module for the Federal Income Tax
Withheld from the facilities employees. The debit comes from the A/P module when the
941 Deposit is prepared for the current payroll.
State Income Tax Withheld
The credit to this Account comes from the Payroll module and is equal to the amount of
PA Income Tax Withheld from the facilities employees. The debit to the account comes
from the A/P module when the Bi-weekly deposit is made to the PA Dept. of Revenue.
Local Income Tax Withheld
The credit to this Account comes from the Payroll module and is equal to the amount of
Local Income Tax Withheld from the facilities employees. The credit comes from A/P
module when the Quarterly Tax deposits are made. This account is verified from the
Quarterly Government Tax report in the payroll module.
FICA/Medicare Tax
The credit to this Account comes from the Payroll module and is the sum of
FICA/Medicare withheld from the facility employees and the employers matching share
as calculated in the Bi-Weekly payroll. The debit comes from the A/P module when the
941 Deposit is reviewed.
Occupation Tax
This is a one time tax upon the employees, normally between $10 and $52 and is
deducted from the employees on the last pay of the first quarter. The debit to the
account comes thru the A/P Module when the tax is forwarded to the Local Tax
Collector.
State Unemployment Tax Payable
This Account's credit comes from the Payroll module, which calculates the facilities PA
Unemployment, each pay. The debit to this account comes from the A/P module at the
end of each quarter when the tax deposit is made. Verification of this account balance
is made from the Quarterly Tax Report and as calculated on the PA Unemployment
Form.
Affinity Health Services: Financial Manual/Section 2/3
Federal Unemployment Payable
This Accounts credit comes from the P/R module and reflects the facilities liability for
Federal Unemployment Tax. The credit comes from the A/P module when the
Quarterly Tax Deposit is prepared. Verification of this balance is made from the
Quarterly Tax Report.
PAGE 5 OF 5
SUBJECT: CHART OF ACCOUNTS DESCRIPTION -- CURRENT LIABILITIES
Account Description
Accrued Payroll Taxes
This Account reflects the amount of payroll taxes owed from the date of the last payroll
end date thru months end. The preferred method of calculating this accrual is to use
the Journal Entry from the first pay in the following accounting period. The method
takes the actual payroll taxes and divides by the number of days to the end of the
month. Journal entries debit the various P/R Tax Accounts and credit the Accrual. The
account must be reversed on the first of the following month, preferably by having the
original entry "Auto Reverse".
Payroll Garnishment
The credit to this Account comes from the P/R module when a garnishment is ordered,
usually by the court for child support or by PHEA for default on student loans. The
debit is posted to the account when payment is forwarded to the appropriate agency.
Credit Union Deduction
The credit to this Account comes from the payroll module when an employee enrolls in
a credit union and requests a voluntary deduction be made from their pay. The debit to
account comes from the A/P module when the amount is forwarded to the credit union.
Affinity Health Services: Financial Manual/Section 2/3