Leave Liability in QuickBooks after an employee gets a pay rise.

Legacy KB ID: 2321

Question

Do I have to do anything in QuickBooks after giving an employee a pay rise in Quicken Payroll?

Answer

The employee probably has some accrued annual leave, sick leave, and maybe special leave (RDO). The same process applies to each so I will detail just accrued annual leave here. The accrued leave will have been transferred to QuickBooks as the number of hours x hourly rate. This value will be entered in a journal entry against Payroll Expenses:Leave Accrued, and Payroll Liabilities:Leave Liability. But when the employee takes some of the leave in the future, he will be paid number of hours x new hourly rate. So if the employee receives a pay rise, you will have to increase the liability and expense for that employees accrued leave. To do so: Open Quicken Payroll and edit the employee, before doing a pay run at the new pay rate. Note the hours of annual leave accrued to date on the leave tab. Multiply this figure by the change in the employees hourly rate. eg 125 hours x $0.46 = $57.50. Open QuickBooks and enter a journal on today's date: Debit Payroll Expenses:Leave Accrued for 57.50 . In the memo column put the employees name and "increase in leave accrued value due to pay rise". Credit Payroll Liabilities:Leave Liability for 57.50 . If the employee had a negative number of hours accrued, eg -125 hours, then you would Credit Payroll Expenses:Leave Accrued for 57.50 Debit Payroll Liabilities:Leave Liability for 57.50 This will bring the annual leave expenses and liability up to date. You need to do the same for any other leave accrued for this employee. You can now process a pay run.

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