QuickBooks and PD7A

by Penny
(Winnipeg, Manitoba)

Bookkeeper Yearend Wage Accruals and T4 Slips

Bookkeeper Yearend Wage Accruals and T4 Slips

It is year end and pp26 ran Dec. 4-17/2011 and was paid Dec. 22/2011.

As the tax return is on a cash basis this makes me understand that the last pay period in December which ran the 18-31 will not be paid till Jan 5/2012. These 2011 wages will become pp1 in 2012 and will carry into January 2012 when they are paid.

I'm thinking I don't want the Dec. 18-31 wages to show up on the 2011 T4 slip or summary but QuickBooks does not allow me to modify the T4Summary to Dec 17 which was the last pp in 2011.

Am I mistaken in how this works? I expected to close off the T4 Summary on Dec 17/2011. I expected Dec 18-31 paid in 2012 to be the first pp of 2012.

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Hi Penny,

I think you'll find that when you do your first pay period (pp) in 2012 that pays out the income earned in 2011, the PD7A will automatically exclude the unpaid wages from the 2011 report and automatically include the amount in your PD7A report for 2012.

QuickBooks "knows" that income is reported in the year it was paid for tax purposes and will also adjust your T4 slips and T4 summary to accommodate this rule.

However, for accounting purposes, you need to accrue (in a journal entry) the wages that were earned but not paid in 2011. Reverse the accrual in the following month. This ensures that your wages and payroll taxes are not understated in 2011 and overstated in 2012.

Hope this helps you out.

P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

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Jan 04, 2012
Follow up
by: Penny

Actually that is why I asked the question.

QuickBooks did not take out the Dec 18-31 pay period paid in 2012.

I did the payroll manually just to check as we have had clients with this issue in the past. It added in the income to the 2011 T4 summary and yet it was "as yet not received by the employees".

In my case it appears QuickBooks did not know.

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Hmm something must not be setup correctly.

When you asked your question, I went into one set of books and did the final payroll. Any amounts earned in the prior year but paid in 2012 were not included in the 2011 T4 slips or T4 summary.

I even changed the payment date of the pay period to 2011 to see what would happen. When I did that, it changed the 2011 reporting to include the amounts.

I am fairly certain that if you do a lot of manual overrides in payroll that sometimes it can cause a problem. Without seeing your books, I'm not sure what the problem is.

Have you called Inutit Support or posted to their community forum?

Jan 05, 2012
Follow up
by: Penny

I'm sure you are correct and it is a set up issue. I even took the time, the pay period everything out and it still includes the 2012 amount.

Oh well I have manually redone the numbers so many times that I may as well just hand prep the slips and summary. Thanks

Dec 05, 2013
Pam, Abbotsford BC
by: Source Deductions and PD7A

For example when I write a cheque to an employee on December 3, with a November 25 pay period ending, do the source deductions have to be remitted for November (December 15) or December (January 15)?

Dec 05, 2013
Remitting Payroll Source Deductions
by: Lake

Hey Pam,

I chatted about this over in tax filing deadlines.

For the purpose of tax filing deadlines, income is reported in the period it was paid NOT when the income was earned.

Therefore your source remittance deadline for December is January.

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