vacation accrual

Pub Vet · ‎July 15, 2021

Hello,

I don't have QB assisted payroll so I do all of my own entries for payroll and also the vacation accrual liability. To illustrate my lack of knowledge and confusion, I'll use our payroll to ask my question. An entry would look like this. Our payroll expense each month is about, $14,000 which is made up of both direct deposit and employee taxes. Then another $1,000 in employer taxes. There are two electronic withdrawals from our bank account, one for about $10,000 and then another for $5,000 (direct employee deposits and then taxes). My entries are, debit to employee payroll and another to taxes/benefits, then a credit to our bank account, all adding up to the $15,000 withdrawal from the bank. Hence...my bank rec is in balance. After calculating the accrued vacation...for this exercise I'll use $2,000, I enter debit $2,000 to vacation accrual expense (say for the month of June), then credit $2,000 vacation payroll liability (illustrated on our balance sheet). Now...recently and for the first time...someone took vacation. Based on their hourly equivalent, days taken, the reduction to our vacation lability is $4,000. So...this employee is both paid his regular salary while they are away...and their vacation accrual is reduced (by the $4,000). Now...if I enter - debit $4,000 to Vacation Accrual Liability and credit cash (my bank account) my bank rec is not going to balance since we did not actually pay out that $4,000. He used that $4,000 equivalent for his vacation. So...what am I missing? what's the entry to decrease my vacation accrual lability? thanks

MichelleBh · ‎July 15, 2021

I've got some information and resolution about your vacation accrual liability account in QuickBooks Desktop, @Pub Vet.

I know the importance of having accurate books. Great job with the steps you've taken so far, and I appreciate what you've described here with how your payroll works.

With this, I’d recommend creating an opposite Journal Entry (JE) to your bank and vacation accrual liability account. This way, the vacation liability account will decrease in your QuickBooks.

Here's how:

Go to the Accountant menu on the upper left side.
Choose the Make General Journal Entries button.
In the first row, pick your bank and enter the amount in the Debit box.
In the second row, select your vacation accrual liability account and type the amount in the Credit section.
Complete the necessary fields and click Save and Close.

Also, I'd suggest consulting your accountant for proper guidance in creating JE.

Once done, you'll want to review your chart of accounts to track all the data you've entered into the system. Let me guide you on how.

From your QBDT homepage, press Ctrl + A.
Locate your bank and liability account in the list.
Review the amount for both accounts.

I've added some articles about adding the appropriate accruals to your payroll system and updates for sick and vacation pay.

Let us know if you have any questions about employee vacations. I'm always here to help. Keep safe.

Pub Vet · ‎July 16, 2021

Yeah...that won't work. that puts my bank out of balance. but thanks for responding.

Pub Vet · ‎July 17, 2021

no...that solution does not work.

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vacation accrual