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EllenR's avatar
EllenR
Experienced User
3 years ago
Solved

Back Pay

I had to backpay 6 staff for 4 pay periods. I did it the same way as I always have which is change the rate of pay then reverse the old pay and then redo it with the correct payrate. Obviously this was the wrong way as now I have an amount in my payroll clearing account and my bank reconciliation does not work.

Should I go back and back and reverse everthing and redo as a back pay as set out by MYOB or can I do a journal entry that will clear out payroll clearing and hopefully fix the bank rec?

Any thoughts??

Regards

Ellen

  • Tracey_H's avatar
    Tracey_H
    2 years ago

    EllenR 

     

    Hi Ellen

     

    When you reverse a transaction an exact copy of the original transaction is recorded, just with the positive amounts as negatives. The Pay from account remains the same, if that was the payroll clearing account the original transaction and the reversal clear each other out so you wouldn't need to do anything for those transactions.

     

    If you did want to move them out of the payroll clearing account you need to do a transfer money for each pay transaction. So you'd do a Transfer money with the From account as the bank account and the To account as the payroll clearing account for the original pay transaction. And another one with the From account as the payroll clearing account and the To account as the bank account.

     

    The payroll clearing account will have two debits and two credits all for the net amount which clear each other out. The bank account will have one debit and one credit for the same amount, tick both in the Reconcile accounts window to manually reconcile.

     

    When you reprocess the pay with the correct amount you would need to record a Transfer money transaction for the new net amount. When recording a Transfer money transaction the From account is always the account the payment is being withdrawn from. So in this situation the From account is the bank account and the To account is the payroll clearing account.

     

    Only the net amount is posted to the account selected in Pay from account as this is the amount being paid to the employee. PAYG and super are posted to the liability payable accounts.

     

    What you should end up with in the Reconcile accounts window for the bank account are the original net amount and the reversed net amount which clear each other out. And the new net amount which should equal the two bank feed transactions. In the Bank feeds window hide the two bank feed transactions, in the Reconcile accounts window tick the net pay transaction.

     

    If you're still having problems with this please send me screenshots of the original pay transaction, the reversal and the new pay transaction by private message.

     

    Please let me know how you go.

     

    If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

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  • Tracey_H's avatar
    Tracey_H
    Former Staff
    3 years ago

    Hi EllenR 

     

    Thanks for your post. Typically back pays are processed as adjustment pays, this Help Article has detailed instructions: Back pay

     

    When the net wage amount is in the payroll clearing account instead of the bank account you can record a Transfer money transaction to move the amount. The From (withdrawal) account is the bank account and the To account is the payroll clearing account.

     

    As you reversed and reprocessed the pays the issue you may have is that the amount transferred is not the same as the pay transaction so you won't be able to match bank feeds. You may need to manually reconcile those pays.

     

    Please let me know if you need further help.

     

    If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

    • EllenR's avatar
      EllenR
      Experienced User
      2 years ago

      Hi Tracy,

      If I do a transfer from bank account to payroll clearing, it doubles the amount in payroll clearing instead of netting to zero. If I do the transfer the other way, while it zeros payroll clearing, it throws my bank reconciliation out even more. I have tried to manually match the pays in my bank rec but what I find is the reversable shows the gross amount and the new pay only shows the nett amount. For instance 1 staff had an orginal gross pay of $3539.17 made up of nett pay of $2683.17, tax $856.00 and super of $305.76. I reversed this and did a new pay where the new gross is $3716.04 with nett of $2798.04, tax of $918.00 and super $321.04. I had to pay an extra as back pay of $114.87 and remit extra tax of $62.00 and $15.28 for super. Myob has the reversed amount of $3539.17 but the new amount is only the nett amount of $2798.04. There is nothing for the tax or super. It is showing the the staff member needs to pay $741.13 which is wrong. What is happening ?? Any ideas on how to fix it?? regards Ellen R

      • Tracey_H's avatar
        Tracey_H
        Former Staff
        2 years ago

        EllenR 

         

        Hi Ellen

         

        When you reverse a transaction an exact copy of the original transaction is recorded, just with the positive amounts as negatives. The Pay from account remains the same, if that was the payroll clearing account the original transaction and the reversal clear each other out so you wouldn't need to do anything for those transactions.

         

        If you did want to move them out of the payroll clearing account you need to do a transfer money for each pay transaction. So you'd do a Transfer money with the From account as the bank account and the To account as the payroll clearing account for the original pay transaction. And another one with the From account as the payroll clearing account and the To account as the bank account.

         

        The payroll clearing account will have two debits and two credits all for the net amount which clear each other out. The bank account will have one debit and one credit for the same amount, tick both in the Reconcile accounts window to manually reconcile.

         

        When you reprocess the pay with the correct amount you would need to record a Transfer money transaction for the new net amount. When recording a Transfer money transaction the From account is always the account the payment is being withdrawn from. So in this situation the From account is the bank account and the To account is the payroll clearing account.

         

        Only the net amount is posted to the account selected in Pay from account as this is the amount being paid to the employee. PAYG and super are posted to the liability payable accounts.

         

        What you should end up with in the Reconcile accounts window for the bank account are the original net amount and the reversed net amount which clear each other out. And the new net amount which should equal the two bank feed transactions. In the Bank feeds window hide the two bank feed transactions, in the Reconcile accounts window tick the net pay transaction.

         

        If you're still having problems with this please send me screenshots of the original pay transaction, the reversal and the new pay transaction by private message.

         

        Please let me know how you go.

         

        If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.