Employee quits-outstanding Pay Advance paid via Employee AR

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Employee quits-outstanding Pay Advance paid via Employee AR

Post by M1EnterpriseTech »

Employee leaves the shop with an outstanding Payroll Advance, and final check wouldn't cover the amount owed so employee paid the debt with his Debit Card and the shop processed the payment in the employee's Receivable Account.

Now there is a Credit for the payment amount sitting in the employee's Receivable account and the Payroll Advance still shows in the Payroll Entry screen and a his final payroll check needs to be processed still. How can we fix this?

Step 1:
Do a Payroll Entry creating a Payroll Item Entry in the top half to the "Advance" Payroll Item with a negative amount to match what the employee paid to clear the debt. This will clear the Payroll Expense which is where the Advance sits until it is paid in full.

Step 2:
Then you will need to do a GL Adjustment to Clear the amount sitting in the bank/cash drawer and the offsetting entry will be to the employee's AR account to increase.
Debit the AR to increase and Credit the Cash Drawer to decrease. It's a wash in both.

Step 3:
Proceed with Payroll Entry for final check as normal.
Enterprise Support Specialist
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