Wage deduction for purchases made from the business

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  • Updated 9 months ago
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I have an employee who has a sum deducted from his pay each week to pay off tools he has purchased through/from the business. The purchases have been invoiced to the employee as a customer. How can I set this up in some kind of journal or ledger so I can see at a glance when he has accrued "spending" money or when he has a balance outstanding?
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Jo Arnold

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Posted 9 months ago

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John Graetz

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Hi Jo.  Where is the pay deduction amount sitting when it is deducted from his pay - in some kind of Liability Account?  If this is the case, you could do a journal which clears that Liability Account with the other side of the transaction being to Accounts Receivable - you would need to enter the employees Accounts Receivable Customer:Job Name in the column titled Name.
John L G
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Kevin Whiting

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I like to use a "Contra Cash" bank a/c.  Point the Payroll Item to the Contra Cash, then "receive" the equivalent amount against his Invoice into Contra Cash.  You should be able to see matching Dr & Cr.

Kevin 
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John Graetz

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Good idea Kevin.  I use a similar "Bank" account called Internal Transfers, in a similar manner for a range of other transactions, which makes life a lot easier.
John L G
(Edited)
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Jo Arnold

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Hi John

There are actually two deductions - there is one that is deducted from his gross pay and this portion goes to a payroll liability account; the other appears to be set up as a deduction from his net pay and is allocated to an income account.

I am currently doing a journal as you suggest to clear the liability account against the accounts receivable but because of the other part of the deduction (that goes to the income account - purchases) my balance is not accurate. 

Can you suggest a better way of getting around this?

Cheers
Jo
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John Graetz

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Jo.  This sounds strange and complicated. Give me a ring on 0428 695454 as it is likely to be a lot easier to discuss options.
John L G
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Jo Arnold

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Morning John

Thank you.  I will be in touch later today.
Jo