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Level 1

Employee Pay Advance repayment

I have an employee that has a pay advance to br repaid.  I am deducting payments from his earnings on his paychecks to reduce the amount owed. However, he recently brought in cash to pay towards the balance. How do I apply this payment to the outstanding Pay Advance balance?

4 Comments
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QuickBooks Team

Employee Pay Advance repayment

Hello Servco,

 

It's great to hear your employee is working toward paying off the balance. Factoring in this cash installment may take some accounting maneuvering to get it just right, such as using a journal entry to hit the appropriate accounts. Because of that, I encourage you reach out to an accountant to help with this matter.

 

QuickBooks can help you find an accountant if you're in need of one. Check out our Find a ProAdvisor page and enter your postal code to begin your search. From there, you can filter for the product you're using to find a good fit for you.

 

I hope that helps. Enjoy the rest of your day!

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Level 1

Employee Pay Advance repayment

Hello LauraAB,

 

Thanks for responding to my question.

I feel this is a QBooks programing issue.

The payroll sector of Quick Books is completely separate from all other  sections of the program with no way to cross over. A General Journal does not 'reach' an employee's account. So even if we credit the payroll Pay Advance account and include the employees's name, it does not reduce the amount owed by that particular employee. In other words, a  General Journal does not work.

The only way to reduce the pay advance on the emplotee's account is as a negative amount on a paycheck. So I deposited the cash to a Misc clearing account (bank account type) and then created a paycheck  (using this bank acount) and filled in the amount as a negative Pay Advance. This automatically reduced the Pay Advance amount but I was not allowed to complete the transactions because QBooks does not allow a negative cheque to be created.

 

Is the person you are suggesting I contact able to create a way to bridge this gap - i.e: is this a Quick Books programmer/advisor and not a regular accountant?

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QuickBooks Team

Employee Pay Advance repayment

I hear what you're saying. ProAdvisors are regular accountant users who are familiar with the program and would know how to navigate this sort of situation. In the event a journal entry doesn't work, an accountant familiar with QuickBooks may know of another way that this can be sorted out.

 

If you'd like to take a closer look with our phone support team, you're welcome to give us a call. With taking a look at how you've configured your payroll and the advance, they may give you a place to start. The number to dial is 1-877-772-9158. Learn more about support hours and policies here: Intuit QuickBooks Desktop software support policies

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Level 7

Employee Pay Advance repayment

Hello @Servco,

 

You have the correct idea about using a clearing account as this must be done in three steps.

 

If I were in this situation, I would do the following.

 

1.  Employee has Advance outstanding on pay cheque.

2.  Employee brings in cash to pay it off.  Create a journal entry, debiting Cash/Bank Acct (the real one) and crediting your clearing bank account.

3.  Create a new Addition Payroll item called something like Advance - ADJUST  and link it to your clearing bank account.

4.  Begin an Unscheduled Payroll.  Clear all pre-filled line items that come up on the pay cheque window for the employee.  Enter the QB Advance item with a negative number, bringing advance balance to $0.00.  Go down to the Other Payroll Items section of the pay cheque.  Use the new Advance - ADJUST item and enter a positive amount to offset the Advance item under Earnings.

 

You now have a $0.00 pay cheque, which QB will allow you to do.  You just can't have a negative one, for obvious reasons.

 

Your Advance item for that employee will be brought back to $0.00.  The $ the employee paid back in cash will be in the bank or petty cash or wherever you put it, and your clearing account should be back at $0.00.

 

Net effect of entries as follows:

Original Advance (Paycheque)

Advance Asset Account                                DR

Bank (acct Paycheques are paid from)       CR

 

Cash payment from Employee (JE)

Bank (acct Paycheques are paid from)       DR

Internal Clearing Acct                                    CR

 

Paycheque to clear advance

Internal Clearing Acct                                   DR

Advance Asset Account                               CR

 

Good luck!