Our company receives a bill from the health insurance company at the beginning of each month and we pay it at that time. We debit Insurance Payable and credit Cash. Then, at the end of each month, we run a payroll summary from our payroll software and Debit Insurance Expense for the company contribution and credit the Insurance Payable for the sum of the employee and company contributions. Therefore, our Insurance payable/accrual does not zero out each month and we were left with a net debit balance at the end of the year. How can I clear that out? Our monthly payroll entry is Debit Wage Expense, Employer portion of taxes, and employer portion of insurance; Credit wage payable, tax payable, HSA payable, and insurance payable. We pay payroll every other week and record that similar to the insurance Debit wage payable and Credit cash - this payable clears out appropriately each month, but not the insurance payable. How can we fix that? Obviously know the credit is to the Insurance payable, but can't figure out the debit. Appreciate any help on how to modify this approach going forward as well as I am new in this role and this is how the company has recorded payroll for a couple years.
