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PS Cashbook

Pay Advance/Employee Loan

Summary

How to account for a pay advance to an employee?

Detailed Description

The following steps will guide you through setting up Cashbook for recording pay advances.

Step 1. Create an Asset account

  • Click on the Chart toolbar icon.
  • Click on the Assets tab.
  • Click on the Add button.

 

Step 2. Create an Advances in Pay account

This account will be used when you pay an advance on the employee's pay/wages.

  • Click on the Chart toolbar icon.
  • Click on the Expenses tab.
  • Click on the Add button.
  • Add details for new other expense account Advances in Pay (see below):
    • Account Type: Other Expense
    • GST Category: 10. Non-reportable Payments
    • Balance Sheet Link: 505 Payroll Advances

 

Step 3. Create an Advance Repayment account

This account will be use to withhold the advance from the employee's future pay.

  • Click on the Chart toolbar icon.
  • Click on the Income tab.
  • Click on the Add button.
  • Add details for new other expense account Advances in Pay (see below):
    • Account Type: Other Income
    • GST Category: 11. Non-reportable Receipts
    • Balance Sheet Link: 505 Payroll Advances

 

Step 4. Create an Advance Repayment deduction in Payroll

This deduction will be used to record the repayment of an advance in the employee's wages

  • Click on the Payroll toolbar icon.
  • Click on the Setup Lists tab.
  • Click on the Deductions tab.
  • Click on the Add button.
  • Enter as follows:
    • Name e.g. Advance Repayment
    • In the Optional Cashbook Account box:
    • Tick the Allocate to radio dial.
    • Select Account e.g. 085 Advance Repayment
    • Click OK to save.

 

Example Use

A shearer Daniel Brown does not get paid until the end of the week but he has asked his employer for an advance in his wages of $200.

Step 1: Recording an advance in pay

 

  • Click on the Cashbook icon.
  • Click on the Add button.
  • Enter the payment transaction.
    • Type - Payment
    • Gross Amount - 200.00
    • Code - 175 Advances in Pay

 

 

Step 2. Deducting the advance from a wage payment

  • Click on the Payroll icon.
  • Double-click on the employee

 

 

  • Click on the Add Pay button.
  • Make sure Pay For Period Ended and Date Paid is corrrect.
  • Click on the Wages/Salary tab.
  • Enter pay information as you would normally. e.g number of hours, rate, allowances etc.
  • Click on OK button.
  • Click on the Deductions tab.
  • Fill in window as follows:
    • Deduction e.g. Advance Repayment
    • Amount e.g $200 (this is the amount of the advance you have paid your employee)
    • Note optional
    • Click OK to save.

 

 

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