Payroll bank account problem

[debbieg]

One of our employees has her money split between a checking and savings account. I recently discovered that she had closed the savings account. Two payrolls were processed before this was discovered and each time the bank put the money back in our checking account since it could not be processed.

So, how do I go about repaying her this extra money? Do I modify a future payroll to add this extra amount? That would mess up taxes and over state her actual earned income. Should I just pay her a separate check outside of the payroll system? If so, what accounting entries would handle the deposit that was made by the bank for the returned money and the check that is written to the employee?

We use PC Plus 11.5.
thanks for your help.
debbie

[JohnDMeyers]

It sounds like the bank simply "voided the check" in a sense.

You should do likewise. Just void those two payroll checks and rerun them for that employee with just the checking account selected.

[debbieg]

John...it's not quite that straight forward. The payroll is done through an online banking process and goes in as a lump sum for all employees. For example, the bank would show a debit of $2500 for payroll but then posted a credit of $50 for the money returned from non-existant bank account.
I'm thinking that I don't need to go back through the payroll module because it doesn't know that anything is wrong. After looking at the accounting transactions that are posted from the payroll module, I think I might do the following:

first transaction to mimic the returned money to church's checking account.........

.........................DEBIT..............CREDIT
1110-checking..........50.00
5165-Secretary............................50.00

second transaction to write a stand-alone check to the secretary for her missing money.......

1110-Checking.............................50.00
5165-Secretary..........50.00


I think accounting wise this would take care of it. The secretary expense account will be a wash and still come out with the right totals at the end of the year. Will it mess up anything in the payroll as far as tax reporting? I don't want the W2 to be wrong at the end of the year....that's why i was trying to avoid any changes to payroll module.

thanks,
Debbie

[JohnDMeyers]

Will it mess up anything in the payroll as far as tax reporting?

Debbie: Now that I have a better idea about the situation, I can pretty honestly say, "I don't know".

It depends on who creates your W2s. If "the bank" does, then aren't they the ones that negated the payrolls to your secretary? If so, they likely will not report it on the W2's that they create. But, again, I don't know how that part of your system works.

[beas]

Debbie, I may not be seeing everything here, but it seems to me if the payroll is actually done by you in PC+ and you are just depositing it to the employee's bank accounts via ACH, you could show the money the bank refunded to you as a non-giving income or pass-through and then write the employee a check for the returned money and post it to a non-giving disbursed or pass-through disbursed. You wouldn't want to post it to the expense account that is associated with the secretary's payroll. That would throw your payroll off. If your payroll is correct in PC+ now, it will remain correct.

[debbieg]

@Bill....duh, how obvious! I believe I was overthinking this.

You are correct in that PC does not know that anything is wrong. I think I can use the transactions that I listed above but instead of pointing to the payroll expnese account, I can just use one I have called "Misc" and put the money in and out thru that one. it will be a wash and the payroll tax records are not affected.

thanks for your suggestion!

Debbie