Moving payroll payables to expense??
This is something I've never come across, the previous bookkeeper/accountant makes a JE monthly debiting (reducing) the various benefits payables accounts and crediting (increasing) the company's benefits expense accounts.
When we pay the benefits provider, why wouldn't we just reduce the payables and expense our portion when we write the check? Isn't this the company taking withholding as expenses as well as our portion?
Sounds like the previous bookkeeper was wiping out the accrual from the previous month and then expensing the whole thing when paid. (Crediting the company's expense accounts is actually LOWERING the expense.) Or offsetting employee's contributions.
At any rate, this should not be a problem. Doing it the old way would make sure all of the costs are captured when writing the check with prior month obligations reducing the current month's expense. May not be the way everybody would do it but it clears the payables account to zero which is what you want when paying the whole thing out!
Thanks for the input, I see what you are saying and yes the expense is lowered so that is ok. I was stuck on the
So what she was doing was not wiping out accrual but taking the actual EE benefits entries when QB payroll imported and JE from payables to the ER expense account.
This seems like it's taking the longest way around since everything is split up by class and all the benefits accounts the JE's for this are close to 100 lines and vary each payroll.
We have moved to ADP and I think I'll avoid this extra entry when we can clear the liability when paying it.
You have a great way of explaining so others can work it out and understand better. Thanks!