So what is the issue? Well, let's work through the following example...
- Employee 1 is a salaried employee making $1000 per weekly pay period, making their hourly rate $25/hr based on 2080 hrs/year
- Let's assume that the pay period is the same as the timesheet report period (weekly)
- Employee records 45 hrs on their timesheet for the week
When the timesheet posts, it will post 45 hrs of cost to the project at $25/hr -- $1125. This $1125 also posts in the general ledger:
- $1125 Debit to Work in Progress or Cost of Goods Sold/Expense as appropriate
- $1125 Credit to Contra Account for Costs
The intention of this is that it records the project-related expense, and is then offset with the salary expense when it is recorded via payroll or a journal entry. Of course, do we all see the issue with the example above? $1125 of cost is recorded, although we are only going to pay the fabulous Employee A $1000/pay period. So we are effectively overstating the cost on the project and in the general ledger.
The customization we are working on resets the unit cost on the timesheet. So, in the example above it would do the following:
- $1000 pay/45 total hours = $22.22
- Reset unit cost per line on timesheet to $22.22
- Reset distributions so that $1000 is debited to WIP (or COGS/Exp) and credited to Contra account
It should work, and will save clients a lot of frustration. I just laugh at myself that I didn't think to rope Steve in to it sooner. Now let's not even talk about what would happen if the pay period and timesheet reporting period were not the same!