[Veena1]

Hi

We have rec'd a refund from state of VA for 2007 state withholding we paid. If I deposit in 2009 which a/c does it go it?

[morgaine300]

The answer to this kind of question always depends on where you put it to begin with, and adjustments to that you made in the meantime.

In other words, if you originally put the correct amount into the payable account, and then simply over-paid it, then too much came out of the payable. If you didn't adjust that account in the meantime (like realize it was off cause of this over-payment and try to correct it), then it just goes back into the payable.

If that is not the case, it will depend on what else you may have done, how material it is, and how technically correct you need to be. Since technically it should have been in the payable and too much came out, then it should go back into it. But if anything happened in the meantime, that could screw up the payable account. What you need to know is where that payable account needs to be at the end of the current year and make sure it's correct. It will be whatever is due from the recent payrolls that have not been paid as of year-end. You can always use this check to adjust against that account to get it correct and throw the balance into miscellaneous income.

You seem to have a lot of this. If prior years are really that screwed up and it's too difficult to track down all the original stuff, sometimes you just have to adjust current balances to the correct amount and toss everything into a "miscellaneous expense/income" account and hope that it doesn't become too big by year-end. I once came into a mess where I had to adjust a lot of stuff to get current correct, and the person prior to me had made such a big mess that there was just no way I could track it all down properly, and I threw everything through cash short & over. By time I adjusted a lot of positives and negatives through that account, the ending balance really wasn't too terrible.

You're asking a lot of stuff that it's difficult for someone on the outside to answer, without seeing all your stuff. The real way you correct prior year stuff that is going to affect net income is through the beginning retained earnings balance, but if you have a small company and none of this is material, you don't need to worry much about doing that. It does sound like you have a big mess on your hands though.