Sorry,
I had already posted the transactions in Fund accounting so I reversed the Fund Accounting entry even though it said it wouldn't affect the Payroll Module. That gave me the 21000-REVERSE entry. I did not reverse anything in Payroll.
So then technically, I would just have to do what you instructed below... except for....
I checked the payroll entry and the "Maintain Item Description" to find that the expense account was set up to use the 01-4810- restricted account..

I had 'corrected' the restricted 'accounts' for "Pastor Appreciation" under 'maintain list of donor restrictions' but didn't realize that the payroll setup was incorrect... and I've already processed and printed the check. I am not sure if I can correct this entry unless I go and reverse the Payroll entry and process that check again??? Can I even do that now? since I have reversed the Fund Accounting transaction already?
For future 'Pastor Appreciation' payroll amounts this is what I plan to do:
1) Use the 'Maintain Item Description' for Pastor Appreciation and change the Expense account to 01-5270- (Staff Appreciation).
2) The restricted funds set up is correct, I believe, (I used the 'Maintain List of Donor Restrictions" so I have an Equity, Income and -48xx- release account associated to it.)
3) Monies collected for Pastor appreciation will go through the Contribution fund 120 that credits the 01-4270- income account that closes to the 01-3270- equity account.
4) Process Payroll with the Payroll item "Pastor Appreciation" that uses 01-5270- as the expense account that is Income, and taxable.
5) Post Payroll to Fund Accounting.
6) Under Fund Accounting: Use Modify Unposted Transaction to include 'Release from Restrictions' and select 'Pastor Appreciation', which should bring up the auto entries required. Then my income and expense report shd be more accurate.
Is that correct?
Thanks so much for your help and your speedy reply,
Liz