[qmigroup]

I have an employee who pays for their employee purchases via payroll. When I enter the JE's for the payroll, it seems as though I need to credit accounts receivable however we do not make JE's to that account. I can issue a credit to the invoice however then my payroll JE's will be off. How did I enter this in my system properly? I've been told to use the AR clearing account but I need to know how that works. Please help!

[paraclete]

Accounts receivable is a control account for the accounts receivable ledger which will contain individual accounts so you need to credit the control account and also credit the employees individual account. It would be usual that the system handles this by requiring you identify the sub account when you have a transaction with a control account. You must be able to post a journal entry to the Accounts Receivable accounts in order that you can make corrections, writeoffs and so forth, should they be necessary.

An alternative is to handle such transactions through a clearing account and not use the accounts receivable process. You would do this by crediting the clearing account then drawing a cheque debiting that account and depositing the cheque to the credit of the accounts receivable account which is essentially the process you are using when you handle other payroll deductions such as tax, etc.