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MichelleMM1
January 15, 2024
Question

Employee Advance never repaid

  • January 15, 2024
  • 1 reply
  • 0 views

I need to zero out an employee advance that will not be paid back to the company. The Advances are already in the Employee Advances asset account. What account do I use to offset the Employee Advance Asset account? Can someone tell me how to do this?

1 reply

Rainflurry
Rainflurry
January 15, 2024

@MichelleMM1 

 

The advance should be reported as income to the employee.  If you do it with a payroll deduction, you can offset the payroll deduction liability with the advance asset account using a journal entry - debit the payroll deduction liability, credit the advance asset account for the balance.  

    BigRedConsulting
    BigRedConsulting
    January 16, 2024

    I think one good way to treat the advance as income after-the-fact is to create a special deduction from net pay item that uses the advance account and then use it in the other items on a new paycheck.

     

    To get the check right, fiddle with the gross pay amount on the paycheck until the net pay = the advance amount. Then add the advance item to reduce the check to 0.00.

     

    Perhaps, use a bonus or other type of earnings item that does not imply hours worked.

     

    If you can't get the net pay right exactly to the penny, the usual fix to that is to force the FWH amount by a few cents until the net amount is as desired.

     

     

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      novainstall
      January 11, 2025

      what do you do if the employees passed away and we just want to writeoff?

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