Research Journal Entries
This video tutorial is a guide for processing research journal entries and is being presented to you by Research Accounting, Financial Services at Queen's University. There are two funds used to report research revenues and expenses. Fund 30000 is used for externally sponsored research and 31000 is used for internally sponsored research. All research projects begin with a "3" and are six digits in length. Projects are set up in ranges by funding agency type, and each research grant or contract has a unique project number. For example, projects funded by the Canadian Institutes of Health Research, also referred to as CIHR, may reside in the 394 or 398 project ranges. Each entry in a journal must contain the appropriate chartfield string in order to ensure the transaction is accurately recorded in the General Ledger. Chartfield values include the following fields: the fund, department, account, program, class and project. The fund, department and account fields are mandatory fields. The program field is optional, with the exception of projects funded by the Canada Foundation for Innovation. For these projects, the program field must be indicated for each transaction. The class field is optional and the project field is only required for the research and capital funds. There are some general principles which can be applied to most research journal entries. Expenses may be recoded from one research project to another, or from outside of the research fund. It is important to remember that expenses recoded to a research project must be eligible as per the related funding agency's rules, and the date the original expense was incurred must fall within the eligible dates related to the project. For funding agency specific information, please refer to the Financial Services website or you may contact Research Accounting directly. Contact information will be provided later on in this video tutorial. Revenues should never be recoded in or out of externally sponsored research projects.
External funding agencies will often require us to report on how revenues have been spent. When other revenues are transferred in or out of these projects, this can lead to inaccurate reporting and audit complications. Therefore recoding externally sponsored research revenues is restricted to Research Accounting, Financial Services. Another important principle to remember is that journal entries should be based on current fiscal year transactions. Since previous fiscal year transactions have already been reported on, please contact Research Accounting prior to recoding prior period transactions. Next we will review some examples of research journal entries. Example #1 involves recoding expenses from one project to another, within the research fund. In this case $100 in lab supplies was initially charged to project 383859 and is being recoded to project 341598. The appropriate chartfield values to process this journal entry are shown. You'll notice the same account is used on both sides of the entry. In order to ensure expenses are accurately recorded in the General Ledger, when recoding expenses from one project to another, it is important to ensure the same account used to record the original expense is used when recoding the transaction. The fund indicated on each line is based on the related research project. For example, project 341598 is an externally sponsored research project, therefore fund 30000 is used, while project 383859 is an internally sponsored research project, therefore fund 31000 is used on this line of the entry. The department code should be based on the related project. Since expenses are recorded as debits in the general ledger, the project receiving the expenses reflects a debit amount, in this case project 341598. Since project 383859 is being reimbursed for the original expenses, a credit is represented on this side of the entry. Example #2 involves recoding expenses from a non-research fund to a research fund. In this example, travel expenses which were originally incurred in the operating fund are being recoded to research project 379444.
As indicated in Example #1, the account should be reflective of the same account used in the original transaction; the debit side of the entry represents where the expenses are being moved to, while the credit represents a reimbursement to the operating fund, where the original expenses were incurred. Next, we will discuss internal revenue account 480001. This account is called "Revenue University Funds" and is used to transfer funds internal to Queen's University. In other words, it should not be used to transfer externally sponsored revenues. Therefore, the only time this account may be used in the research fund is when transferring revenue from a non-research fund to an internally sponsored research project. Some important things to remember about this account. When using account 480001 it must be used on both sides of the journal entry as this account must net to $0 across all funds since it is being used to transfer internal funding. Please note that account 480001 should not be used to record cost recovery transactions, which we will discuss further on in this video tutorial. Example #3 reflects a transfer of internal revenue from a non-research fund to an internally sponsored research project. You will notice account 480001 is used on both sides at the entry so that the transactions net to $0. In this example, revenue is being moved from the operating fund to research project 378646. Since revenues are recorded as credits in the general ledger, you will notice project 378646, which is receiving the revenue, reflects a credit amount, while the operating fund, which is providing the revenue, reflects a debit amount. Account 699005 is an expense account called "Grants, Contributions". This account is used to transfer internal grants, or grants awarded by Queen's University, from one chartfield string to another. Please note this account should never be used for externally sponsored research projects, since it is not reflective of actual expenses and cannot be supported by invoices or expense claims for audit purposes.
Next we will discuss internal cost recovery transactions. In the past, cost recovery accounts resided in the 699xxx account range. Effective May 1, 2013, accounts beginning with 699 were inactivated on PeopleSoft Finance, with the exception of account 699005 , which remains active. The inactivated accounts were replaced with new internal cost recovery accounts. The new accounts can be identified with a prefix of "ICR" in the account name. An internal cost recovery account has been created within each existing budget node. For example, account 606002 called "ICR-Printing Services" resides under the budget node 606000-Printing Services, and is used to record cost recoveries related to printing expenses. Example #4 involves an internal cost recovery. The expense in this example was originally charged to the operating fund and is being recovered from project 399999. The debit side of the transaction reflects where the expenses are being recoded to, therefore original expense account 606001 Printing/Photocopying is used. Account 606002 ICR-Printing Services is being used to record the recovery, which is reflected in the credit side of the entry. It is important to mention the new ICR accounts should only be used to record internal cost recoveries. In order to access a complete list of internal cost recovery accounts, please visit the Financial Services website. On occasion, external funding may be received which is deemed an external cost recovery. An example of this would be if an outside organization provides funds to cover a portion of travel expenses charged to a particular project. In these cases, the funding should be deposited to the account where the original expense was incurred, in this case travel account 640001 would be used. Next we will discuss recoding salaries and benefits.
Before doing so, it is important to mention the benefit allocation process. Each month, Human Resources charges fringe benefits to the individual benefit accounts. Examples include accounts 550011 and 550012 . For some research projects, Research Accounting must report these types of expenses according to the corresponding individual. For example, "Bachelor's Students-Canadian" and "Administrative Professional and Technical" salaries are two types of financial reporting categories used. Therefore, for financial reporting purposes, it is important to have the expenses grouped into the appropriate reporting categories in the general ledger. To achieve this goal, Financial Services runs a benefit allocation process on a monthly basis, after the payroll process has run, in order to allocate expenses originally charged to individual benefit accounts to accounts which identify the related payee. An example is account 550029 Bachelor's Students-Canadian Benefits. Here is a snapshot of the end result once the benefit allocation process has been run. In this example, salary expenses totalling $393.12 have been charged to project 341598 for a Canadian Master's Student. Along with this salary, the related fringe benefits are originally charged to the appropriate individual benefit accounts. Once the benefit allocation process runs, the individual benefit accounts are credited for these amounts, so that they net to $0, and the total benefits are reallocated to a benefit account which identifies the related payee. In this case, $35.62 in fringe benefit expenses is reallocated from the individual benefit accounts to account 550031 Master's Student Canadian Benefits. You'll notice the net impact to the project is nil, as these expenses are being recoded within the project, simply using different accounts. In order to ensure the correct amounts are reallocated during the benefit allocation process, the appropriate accounts must be used when recoding salaries and benefits.
When recoding these types of expenses to another project, the original salary account must be used for the salary portion of the expense. In this example, Master's Student-Canadian salary is being recoded from project 341598 to project 383859. You'll notice the same account number is being used on both sides of the journal entry. When recoding the related fringe benefits, the original benefit accounts must be used. In this example, $1.42 is being recoded to project 383859 using original benefit account 550005 Worker's Compensation. You may be asking by the Worker's Compensation account must be used when all benefits will be allocated to account 550031 Master's Student Canadian Benefits. The answer lies in the benefit allocation process. We will now examine this in more detail. Let's say project 394555 had salary expenses totalling $500 charged to Master's Student Canadian account 505101 with related fringe benefits of $40 charged to account 550005 Worker's Compensation. Once the benefit allocation process is run, the benefits totalling $40 will be reallocated from account 550005 to account 550031 Master's Student Canadian Benefits, all within project 394555. Now let's suppose at a later date, these expenses were being recoded to another project. We'll assume a journal entry was processed to recode expenses from project 394555 to 343499 using the following accounts. In addition, let's also assume project 343499 incurred Bachelor's Student-Canadian salary and benefit expenses in the same month. When the benefit allocation process runs, it will pro-rate the benefits based on the total salary expenses by account. $500 charged to the Master's Student Canadian salary account represents 62 percent a total salaries and the remaining $300 Bachelor's Student Canadian salary represents 38%. Next, these percentages will be applied to the total benefits charged to the original benefit accounts. In this example, we now have $65 residing in the Worker's Compensation account 550005.
$25 originally charged to project 343499 and the $40 reallocated from project 394555. The reallocation of benefits will now look like this. As you can see, the total benefits have been allocated based on total salary expenses. If you find this concept difficult to understand, just remember that when recoding salaries and benefits; always use the original expense accounts in your journal entry, versus the benefit accounts which identify the related individual. We will now move on to discuss overhead, also referred to as indirect costs. Research projects which are subject to overhead, are charged amounts each month based on the overhead rate related to that project. Overhead is based on expenses incurred in the given month. For example, if project 364444 had expenses totaling $100 in a given month, all of which were subject to a 30% overhead rate, at the end of the month, a total of $30 in overhead would be charged to the project using Overhead account 693001. When completing a journal entry to close out a project which is subject to overhead, the overhead must be factored into the calculation. Using the same example, let's assume project 364444 was in a deficit position of $100, which needs to be cleared before the project can be closed and inactivated. The first step is to determine the amount of expenses to recode out of project 364444 by backing out the overhead applicable to the $100 deficit. The calculation to determine this amount is: $100 divided by 1.30, which equals $76.92. The second step involves completing a journal entry to recode $76.92 in expenses from project 364444 to an alternate project. Finally, when the overhead process is run at the end of the month, it will look at transactions which have occurred in the month, in this case a credit of . The 30% overhead rate is then applied to this amount, resulting in a credit of . This credit is then applied to project 364444, using overhead account 693001, bringing the project to a $0 balance.
Let's recap. Project 364444 is in a deficit position of $100 $76.92 is then credited to the project and once overhead is run an additional credit of $23.08 is applied to the project, bringing it to a $0 balance. If you encounter any difficulties when determining the appropriate amounts to recode in this scenario, please contact Research Accounting for guidance. The Financial Services website hosts a wealth of information. You may direct any research specific questions to Research Accounting at research.accounting@queensu.ca. Thank you for viewing this video tutorial.
External funding agencies will often require us to report on how revenues have been spent. When other revenues are transferred in or out of these projects, this can lead to inaccurate reporting and audit complications. Therefore recoding externally sponsored research revenues is restricted to Research Accounting, Financial Services. Another important principle to remember is that journal entries should be based on current fiscal year transactions. Since previous fiscal year transactions have already been reported on, please contact Research Accounting prior to recoding prior period transactions. Next we will review some examples of research journal entries. Example #1 involves recoding expenses from one project to another, within the research fund. In this case $100 in lab supplies was initially charged to project 383859 and is being recoded to project 341598. The appropriate chartfield values to process this journal entry are shown. You'll notice the same account is used on both sides of the entry. In order to ensure expenses are accurately recorded in the General Ledger, when recoding expenses from one project to another, it is important to ensure the same account used to record the original expense is used when recoding the transaction. The fund indicated on each line is based on the related research project. For example, project 341598 is an externally sponsored research project, therefore fund 30000 is used, while project 383859 is an internally sponsored research project, therefore fund 31000 is used on this line of the entry. The department code should be based on the related project. Since expenses are recorded as debits in the general ledger, the project receiving the expenses reflects a debit amount, in this case project 341598. Since project 383859 is being reimbursed for the original expenses, a credit is represented on this side of the entry. Example #2 involves recoding expenses from a non-research fund to a research fund. In this example, travel expenses which were originally incurred in the operating fund are being recoded to research project 379444.
As indicated in Example #1, the account should be reflective of the same account used in the original transaction; the debit side of the entry represents where the expenses are being moved to, while the credit represents a reimbursement to the operating fund, where the original expenses were incurred. Next, we will discuss internal revenue account 480001. This account is called "Revenue University Funds" and is used to transfer funds internal to Queen's University. In other words, it should not be used to transfer externally sponsored revenues. Therefore, the only time this account may be used in the research fund is when transferring revenue from a non-research fund to an internally sponsored research project. Some important things to remember about this account. When using account 480001 it must be used on both sides of the journal entry as this account must net to $0 across all funds since it is being used to transfer internal funding. Please note that account 480001 should not be used to record cost recovery transactions, which we will discuss further on in this video tutorial. Example #3 reflects a transfer of internal revenue from a non-research fund to an internally sponsored research project. You will notice account 480001 is used on both sides at the entry so that the transactions net to $0. In this example, revenue is being moved from the operating fund to research project 378646. Since revenues are recorded as credits in the general ledger, you will notice project 378646, which is receiving the revenue, reflects a credit amount, while the operating fund, which is providing the revenue, reflects a debit amount. Account 699005 is an expense account called "Grants, Contributions". This account is used to transfer internal grants, or grants awarded by Queen's University, from one chartfield string to another. Please note this account should never be used for externally sponsored research projects, since it is not reflective of actual expenses and cannot be supported by invoices or expense claims for audit purposes.
Next we will discuss internal cost recovery transactions. In the past, cost recovery accounts resided in the 699xxx account range. Effective May 1, 2013, accounts beginning with 699 were inactivated on PeopleSoft Finance, with the exception of account 699005 , which remains active. The inactivated accounts were replaced with new internal cost recovery accounts. The new accounts can be identified with a prefix of "ICR" in the account name. An internal cost recovery account has been created within each existing budget node. For example, account 606002 called "ICR-Printing Services" resides under the budget node 606000-Printing Services, and is used to record cost recoveries related to printing expenses. Example #4 involves an internal cost recovery. The expense in this example was originally charged to the operating fund and is being recovered from project 399999. The debit side of the transaction reflects where the expenses are being recoded to, therefore original expense account 606001 Printing/Photocopying is used. Account 606002 ICR-Printing Services is being used to record the recovery, which is reflected in the credit side of the entry. It is important to mention the new ICR accounts should only be used to record internal cost recoveries. In order to access a complete list of internal cost recovery accounts, please visit the Financial Services website. On occasion, external funding may be received which is deemed an external cost recovery. An example of this would be if an outside organization provides funds to cover a portion of travel expenses charged to a particular project. In these cases, the funding should be deposited to the account where the original expense was incurred, in this case travel account 640001 would be used. Next we will discuss recoding salaries and benefits.
Before doing so, it is important to mention the benefit allocation process. Each month, Human Resources charges fringe benefits to the individual benefit accounts. Examples include accounts 550011 and 550012 . For some research projects, Research Accounting must report these types of expenses according to the corresponding individual. For example, "Bachelor's Students-Canadian" and "Administrative Professional and Technical" salaries are two types of financial reporting categories used. Therefore, for financial reporting purposes, it is important to have the expenses grouped into the appropriate reporting categories in the general ledger. To achieve this goal, Financial Services runs a benefit allocation process on a monthly basis, after the payroll process has run, in order to allocate expenses originally charged to individual benefit accounts to accounts which identify the related payee. An example is account 550029 Bachelor's Students-Canadian Benefits. Here is a snapshot of the end result once the benefit allocation process has been run. In this example, salary expenses totalling $393.12 have been charged to project 341598 for a Canadian Master's Student. Along with this salary, the related fringe benefits are originally charged to the appropriate individual benefit accounts. Once the benefit allocation process runs, the individual benefit accounts are credited for these amounts, so that they net to $0, and the total benefits are reallocated to a benefit account which identifies the related payee. In this case, $35.62 in fringe benefit expenses is reallocated from the individual benefit accounts to account 550031 Master's Student Canadian Benefits. You'll notice the net impact to the project is nil, as these expenses are being recoded within the project, simply using different accounts. In order to ensure the correct amounts are reallocated during the benefit allocation process, the appropriate accounts must be used when recoding salaries and benefits.
When recoding these types of expenses to another project, the original salary account must be used for the salary portion of the expense. In this example, Master's Student-Canadian salary is being recoded from project 341598 to project 383859. You'll notice the same account number is being used on both sides of the journal entry. When recoding the related fringe benefits, the original benefit accounts must be used. In this example, $1.42 is being recoded to project 383859 using original benefit account 550005 Worker's Compensation. You may be asking by the Worker's Compensation account must be used when all benefits will be allocated to account 550031 Master's Student Canadian Benefits. The answer lies in the benefit allocation process. We will now examine this in more detail. Let's say project 394555 had salary expenses totalling $500 charged to Master's Student Canadian account 505101 with related fringe benefits of $40 charged to account 550005 Worker's Compensation. Once the benefit allocation process is run, the benefits totalling $40 will be reallocated from account 550005 to account 550031 Master's Student Canadian Benefits, all within project 394555. Now let's suppose at a later date, these expenses were being recoded to another project. We'll assume a journal entry was processed to recode expenses from project 394555 to 343499 using the following accounts. In addition, let's also assume project 343499 incurred Bachelor's Student-Canadian salary and benefit expenses in the same month. When the benefit allocation process runs, it will pro-rate the benefits based on the total salary expenses by account. $500 charged to the Master's Student Canadian salary account represents 62 percent a total salaries and the remaining $300 Bachelor's Student Canadian salary represents 38%. Next, these percentages will be applied to the total benefits charged to the original benefit accounts. In this example, we now have $65 residing in the Worker's Compensation account 550005.
$25 originally charged to project 343499 and the $40 reallocated from project 394555. The reallocation of benefits will now look like this. As you can see, the total benefits have been allocated based on total salary expenses. If you find this concept difficult to understand, just remember that when recoding salaries and benefits; always use the original expense accounts in your journal entry, versus the benefit accounts which identify the related individual. We will now move on to discuss overhead, also referred to as indirect costs. Research projects which are subject to overhead, are charged amounts each month based on the overhead rate related to that project. Overhead is based on expenses incurred in the given month. For example, if project 364444 had expenses totaling $100 in a given month, all of which were subject to a 30% overhead rate, at the end of the month, a total of $30 in overhead would be charged to the project using Overhead account 693001. When completing a journal entry to close out a project which is subject to overhead, the overhead must be factored into the calculation. Using the same example, let's assume project 364444 was in a deficit position of $100, which needs to be cleared before the project can be closed and inactivated. The first step is to determine the amount of expenses to recode out of project 364444 by backing out the overhead applicable to the $100 deficit. The calculation to determine this amount is: $100 divided by 1.30, which equals $76.92. The second step involves completing a journal entry to recode $76.92 in expenses from project 364444 to an alternate project. Finally, when the overhead process is run at the end of the month, it will look at transactions which have occurred in the month, in this case a credit of . The 30% overhead rate is then applied to this amount, resulting in a credit of . This credit is then applied to project 364444, using overhead account 693001, bringing the project to a $0 balance.
Let's recap. Project 364444 is in a deficit position of $100 $76.92 is then credited to the project and once overhead is run an additional credit of $23.08 is applied to the project, bringing it to a $0 balance. If you encounter any difficulties when determining the appropriate amounts to recode in this scenario, please contact Research Accounting for guidance. The Financial Services website hosts a wealth of information. You may direct any research specific questions to Research Accounting at research.accounting@queensu.ca. Thank you for viewing this video tutorial.