Incorrect Wages Expense Account

[Kace4321]

Hi, I use STP reporting in MYOB and I submitted the last payrun to the ATO using the MYOB payroll reporting centre. 

I recently set up one of our new employees in MYOB and instead of using the correct Wages Expense Account, I left it at the default which is the company bank account (Asset).  So for his first payrun, his base salary $ was allocated to the company bank account in MYOB instead of the correct Wages Expense Account.   See attached 1a.  What can I do to fix this? 

My bank reconcilation and P&L is now incorrect up as his salary expense is sitting against an Asset account.  See attached 1b.  The company bank account in MYOB however is showing the employee was paid $630 which doesn't make sense.

The correct net pay was paid to the employee. 

Please advise what I need to do to rectify the above.  Many thanks.

[Steven_M · Accepted solution]

Hi @Kace4321 

You have probably already actioned this one, however, the first thing I would recommend doing is correcting the default wage expense account. This should prevent things from getting worse. You can review this by selecting the employee's card>>Payroll Details>>Wages section.

To correct past pays you to have two options:

The quick way to deal with the situation and the cleanest would be to record a journal entry that credits the bank account and debits the required bank account. From a bank reconciliation point of view, you will have the original deposit transaction and then the journal entry which will be a withdrawal. These will cancel each other out and can be ticked/included in your next reconciliation.

The more record-keeping process would be:

1. Navigate to Setup>>Preferences>>Security
2. Enable Transactions Can't be Changed They Must be Reversed.
3. Select OK
4. Navigate to the relevant payroll transaction
5. Select Edit>>Reverse transaction
6. Record the reversal
7. Re-process the pay again.

What the above process will do is generate a reversal transaction in the bank account to which can be ticked with the original transaction to cancel each other out for reconciliation purposes. On the Payroll reporting front, it is based on year-to-date information, so reversing out that pay clears that pay from the year to date. Re-processing that pay will add it back into the year-to-date and thus evens out the payroll reporting.