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Karina7
Level 1

Correcting a Payroll Check

I overpaid an employee ($10,00 instead of $500!) The direct deposit has cleared. I voided the paycheck and reissued the check in the correct amount. I have the check from the employee returning the overpayment. To which account do I apply this payment? I talked to tech support and they said to your bank account (!) and couldn't understand that I was asking what general ledger account?  The expense accounts for the month are all debited and credited correctly so the p&l is fine. I just don't know what to book the returned funds to and don't see any general ledger accounts that are out of balance.

2 Comments 2
Teri
Level 9

Correcting a Payroll Check

You need to look at the original entry when original check was processed.  Where ever that expense was posted, it must have been for $1000 when it s/b only $500.  Most likely need to credit that expense account and debit accrued payroll or cash (whichever was credited originally).   

Karina7
Level 1

Correcting a Payroll Check

As an update, in case anyone else had this issue: When you void the payroll check, it automatically reverses the expense entries and creates a deposit back to the bank. So basically, when you get the check back from the employee, as long as you have voided the check, you don't have to do anything more!

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