Creating Withholding Accounting Entries
This section provides an overview of withholding accounting entries.
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 payment posting or voucher posting (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 is reduced based on the general ledger setup.
The posting process retrieves the ChartField information for the accounting liability entry from the procurement control definition based on the TableSet control value for the PeopleSoft Payables business unit used during voucher entry. You define the ChartFields for the withholding liability on the Withholding ChartFields page within the Procurement Control component (BUS_UNIT_INTFC2). For example:
Define procurement controls for general ledger business units.
Business unit = FED01.
Business unit = FEDRL.
Define, at a minimum, the account ChartFields for the withholding class combination for the general ledger business units.
FED01 account ChartField = 230000.
FEDRL account ChartField = 235000.
Create a voucher in the FED01 PeopleSoft Payables business unit for a supplier who is set up for withholding.
The TableSet control for this business unit's ChartFields is FEDRL.
Run the posting process.
The system looks at the TableSet control for the PeopleSoft Payables business unit and retrieves the account defined for FEDRL in the procurement control definition. The system selects account 235000 as the liability account.
Note: This example is intended to illustrate how the system determines the withholding liability ChartFields and does not represent the entire set up and process flow for withholding.
This section provides posting examples.
Withholding Calculated at Payment: Posting Example
The following example shows the accounting for a 100 USD voucher subject to 1099 withholding. The withholding portion is 33 USD and the non-withholding portion 67 USD.
The following are the accounting entries created:
Post the voucher.
Account
Debit
Credit
Expense Account
100.00
AP Liability
100.00
Pay and post the non-withholding portion.
Account
Debit
Credit
AP Liability
100.00
Cash
67.00
Withholding Liability
33.00
Pay and post the withholding.
Account
Debit
Credit
Withholding Liability
33.00
Cash
33.00
Withholding Calculated at Voucher Posting: Voucher and Payment Posting Example
The following example shows the accounting for a 100 USD voucher subject to 1099 withholding, but in this case the withholding is calculated at voucher posting. The withholding portion is 33 USD and the non-withholding portion 67 USD.
The following are the accounting entries created:
Post the voucher.
Account
Debit
Credit
Expense Account
100.00
AP Liability
67.00
Withholding Liability
33.00
Pay and post the non-withholding portion.
Account
Debit
Credit
AP Liability
67.00
Cash
67.00
Pay and post the withholding.
Account
Debit
Credit
Withholding Liability
33.00
Cash
33.00