Entering ADP, Paychex etc. into Quickbooks

Question:

We use ADP and we have them issue the paychecks drawn on our account (don’t ask, I can’t change this). I enter the info from ADP weekly using Journal entries. The entry debits all the labor accounts and credits all the employee withholding accounts, along with a credit entry for the direct deposit and checks written.

Problem occurs at the end of the month during reconciliation. All checks are not cleared so I cannot balance. I thought I would need a journal entry for each uncleared check to offset the amount entered in the Journal entry, but that doesn’t work.

Any suggestions on what kind of entry I can make at the end of the month when I determine which payroll check for the month have not cleared? I would prefer not to change the way we are entering the Journal entry for the payroll.

Answer:

The only way to reconcile individual checks is to enter one line in the journal entry for each check that makes up the direct deposit and regular paychecks. You would use the same cash account on each line of the journal entry, enter each check amount as a credit and at the start of the memo field list the identifying DDvoucher / check ref no supplied by the ADP report. Under the name field enter the employee name. You will then get each check listed on your reconciliation screen so you can checkmark only those that cleared. After you modify the payroll entry, you can always memorize it under the edit menu and then select it from the memorized transaction list and just change check numbers in the future.

The point of reconciling an account is not to force the book balance to equal what the bank says, it is to explain the difference between the two which is what you get on the report that runs at the end of the reconciliation.

The method I described above simply treats paychecks the same as any regular expense check, one line for every check/charge that hits your bank. The change in journal entry only needs to be made once and then memorized and used from now on. If you want, open your last payroll journal entry, memorize it from the edit menus and name it “Temp JE” . Open this from the mem tx list, make changes and then memorize again as “New Payroll Entry”.

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Tags: Bank Reconciliation, Journal Entry, Payroll

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