Vacation Pay Over/Underpayment

by Darlene
(Edmonton)

Overpayment/underpayment of vacation pay to employees no longer employed


I have been looking through reports of accrued vacation pay and noticed that the previous payroll person either overpaid or underpaid vacation pay to employees that are no longer employed with the company.

Some of these entries are from 2004. How do I clear this off the books?

Hi Darlene,

I would create a sub-account under "Wage and/or Salary Expense" ... or you can pick a more appropriate payroll account on your income statement based on your chart of accounts ... called "Over/Under Payment Vacation Pay". Then I would write it off to that account.



Be sure to bring the entry/entries to the accountant's attention at year-end.




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