Forum Discussion

KGrove's avatar
KGrove
Contributing User
5 years ago

Pay and cash purchases

I'm trying to run a payroll, but the employee doesn't get the money, it goes straight to Cash purchases.    Can someone tell me how to do this please? Having trouble working it out myself.    Tha...
cash purchases
Payroll
  • Steven_M's avatar
    Steven_M
    5 years ago

    Hi KGrove 

     

    With the employee that you deducted a portion of their pay from you would use the deduction category and enter the desired amount that was actually paid to the employee. For example, you deducted $50 you would enter "-50.00" against that deduction category to reduce the net pay by that amount. Note: You may want to discuss with an accountant as to the accounts involved in that process.

     

    With respect to paying off the cash purchases account, you would only enter "-700.00" against that deduction category. This is going to put $700 in the holding account to which you can process through to the required account by the way of a journal entry or another transaction. In addition to that, the Net Pay would be $300 to which you can pay to the employee.

Steven_M's avatar
Steven_M
Former Staff

Hi KGrove 

 

There are a few different ways you could deal with that situation of an employee having the money paid directly to the company:

 

One way you could do it would be:

  1. Create a holding account - Accounts>>Accounts Lists>>Liabilities>>New - give the account a number and a name
  2. Create a new deduction category with that newly created holding account as the Linked Payable Account - Payroll>>Payroll Categories>>New - give the category a name, set the Linked Payable Account to be that holding account. I would set the Calculation Basis to be User-Enter Amount per Pay Period. You will also need to select Employee at tick the appropriate employee.
  3. Prepare the pay for the employee as per normal, however, once you have entered the desired amount of hours/wages... you would take the net pay value and add that as a negative amount against that newly deduction category. For example, if the net pay is $451 you would enter -$451 against that deduction category.
  4. Continue to process the pay as per normal, you will encounter an error relating to the pay being a void amount. This is due to the fact that the net pay amount is $0.00 just continue as per normal.

Once that pay has been processed, you'll have an amount in the holding account which can be transferred to another account if required through a Journal entry or another type of transaction.

The process is similar for the employee who you mainly paid in advance. However, it is recommended to check with an accountant to ensure that the above process meets your reporting requirements.

KGrove's avatar
KGrove
Contributing User
5 years ago

Thank you Steven. 

 

2 questions:

 

1. Net Pay = $500. I gave the staff member cash prior to payday of $50. Therefore, when I do the pays, the total amount of the pay doesn't match up with the bank feed of $450. 

2. Net pay = $1000. This is our pay and I have been using company funds to pay some bills. I need to use part of this $1000 to pay off Cash purchures Account. The bank feed of $300 won't match that I paid $700 to cash purchases. 

 

Does your instructions below help this? I tried it and had trouble working it out. 

 

Thanks for your assistance in advance. 

  • Steven_M's avatar
    Steven_M
    Former Staff
    5 years ago

    Hi KGrove 

     

    With the employee that you deducted a portion of their pay from you would use the deduction category and enter the desired amount that was actually paid to the employee. For example, you deducted $50 you would enter "-50.00" against that deduction category to reduce the net pay by that amount. Note: You may want to discuss with an accountant as to the accounts involved in that process.

     

    With respect to paying off the cash purchases account, you would only enter "-700.00" against that deduction category. This is going to put $700 in the holding account to which you can process through to the required account by the way of a journal entry or another transaction. In addition to that, the Net Pay would be $300 to which you can pay to the employee.

    • KGrove's avatar
      KGrove
      Contributing User
      5 years ago

      Thank you so much. that's been really helpful.