Accounting Entries for Withholding Payments
Depending on your withholding setup, PeopleSoft Payables either generates a separate withholding payment when the voucher is paid, or tracks the withholding for reporting purposes. During the Payment Posting or Voucher Posting Application Engine processes (AP_PSTVCHR and AP_PSTPYMNT, respectively), depending on whether you selected to have withholding calculated at voucher posting or at payment time, a liability is created for the withholding portion as the supplier portion is paid. As you pay the withholding portion, the liability reduces based on the setup in PeopleSoft General Ledger.
Our example is for a 1099 supplier with the following additional information and withholding defaults:
The business unit is US001.
The transaction currency and the base currency is USD.
The entity is the IRS.
Federal withholding is 33 percent.
Action: Voucher Entered and Posted, Withholding Calculated at Voucher Posting
|
GL Business Unit |
Distribution Account Type |
Foreign Amount |
Foreign Currency |
Monetary Amount |
Currency Code |
Calculation |
|---|---|---|---|---|---|---|
|
US001 |
Expense Distribution |
10000 |
USD |
10000 |
USD |
|
|
US001 |
Accounts Payable |
(6700) |
USD |
(6700) |
USD |
10000 - (10000 * .33) |
|
US001 |
Withholding Liability |
(3300) |
USD |
(3300) |
USD |
10000 * .33 |
Action: Voucher Entered and Posted, Withholding Calculated at Payment Posting
|
GL Business Unit |
Distribution Account Type |
Foreign Amount |
Foreign Currency |
Monetary Amount |
Currency Code |
|---|---|---|---|---|---|
|
US001 |
Expense Distribution |
10000 |
USD |
10000 |
USD |
|
US001 |
Accounts Payable |
(10000) |
USD |
(10000) |
USD |
Action: Regular Payment Entered and Posted for the Nonwithholding Portion, Withholding Calculated at Payment Posting, Discount Not Taken
The payment is made only to the supplier and a withholding liability is created for the withholding portion. The withholding entries are grouped by entity and jurisdiction. When the withholding portion is paid to the taxing entity, the withholding liability is debited and the cash distribution account is credited.
Payment processing:
|
GL Business Unit |
Distribution Account Type |
Foreign Amount |
Foreign Currency |
Monetary Amount |
Currency Code |
Calculation |
|---|---|---|---|---|---|---|
|
US001 |
Accounts Payable |
6700 |
USD |
6700 |
USD |
10000 - (10000 * .33) |
|
US001 |
Cash Distribution |
(6700) |
USD |
(6700) |
USD |
10000 - (10000 * .33) |
Withholding processing:
|
GL Business Unit |
Distribution Account Type |
Foreign Amount |
Foreign Currency |
Monetary Amount |
Currency Code |
Calculation |
|---|---|---|---|---|---|---|
|
US001 |
Accounts Payable |
3300 |
USD |
3300 |
USD |
10000 * .33 |
|
US001 |
Withholding Liability |
(3300) |
USD |
(3300) |
USD |
10000 * .33 |
Action: Regular Payment Entered and Posted, Withholding Calculated at Payment Posting, Discount Taken
Payment processing:
|
GL Business Unit |
Distribution Account Type |
Foreign Amount |
Foreign Currency |
Monetary Amount |
Currency Code |
Calculation |
|---|---|---|---|---|---|---|
|
US001 |
Accounts Payable |
6700 |
USD |
6700 |
USD |
10000 - 10000 * .33) |
|
US001 |
Cash Distribution |
(6500) |
USD |
(6500) |
USD |
10000 - (10000 * .33) + (10000 * .02) |
|
US001 |
Discount Earned |
(200) |
USD |
(200) |
USD |
10000 * .02 |
Withholding processing:
|
GL Business Unit |
Distribution Account Type |
Foreign Amount |
Foreign Currency |
Monetary Amount |
Currency Code |
Calculation |
|---|---|---|---|---|---|---|
|
US001 |
Accounts Payable |
3300 |
USD |
3300 |
USD |
10000 * .33 |
|
US001 |
Withholding Liability |
(3300) |
USD |
(3300) |
USD |
10000 * .33 |