How to fix payroll when an incorrect bank account was selected and payroll was closed
The first steps in the Payroll Process include selecting the Bank Account against which you want the Payroll to be posted. Sometimes you get all the way through the Payroll Process before you realize you chose the wrong Bank Account. By this time, check numbers have been assigned (whether created through ACH processing or through printing checks) and once the numbers are assigned, ParishSOFT Accounting has recorded these checks in the Ledger. This article addresses how to fix this issue.
Until check numbers have been assigned, the bank account may be updated
First of all, the delete button and the Bank Account drop-down menu are both active for this Payroll Process only until you have clicked the Print Selected button on the Print Checks screen or created the ACH File. Until you have created your checks, you may update the bank account or delete the payroll process and start over. Simply click on the Payroll Process Icon, select the Open Payroll, and change your Bank Account or click the Delete Button.
Once you have created checks or created the ACH file, you have two options to update the bank account: Create a journal entry to transfer the transaction from the wrong Bank Account (W) to the correct Bank Account (C) or Void the checks and re-enter the payroll process, using the actual check numbers with an alpha character appended.
Create a Journal Entry
Option 1: Create a journal entry which moves the Credit from the wrong Bank Account (W) to the correct Bank Account (C).
The best way to create this journal entry is to use several Credit entries to the Bank Account (C), one for each paycheck using the Net amount of each and one Debit entry to Bank Account (W) that equals the sum of the credit entries.
This entry below is to correct the Bank Account. There is one Credit entry for each Paycheck for the correct Bank Account and one Debit entry for the total for the wrong Bank Account.
How this journal entry affects your Bank Reconciliation for Bank Account (W):
The checks you wrote out of Bank Account (W) will still be on the Bank Reconciliation for that Account. To reconcile these checks you will mark all of the checks plus the Debit Journal Entry you created to move the transactions from Bank Account (W) to Bank Account (C). This will have a zero net effect because of all of the checks together Credit the Account for the same amount as the Journal Entry debit.
Bank Account (W) has the original checks and the reversing journal entry which balance each other out.
How this journal entry affects the Bank Reconciliation for Bank Account (C):
Bank Account (C) has the one journal entry for each check. As each check clears the bank, you may mark it on the Bank Reconciliation.
Void the paychecks
Option 2: Close the Payroll Process, Void each check, (not necessarily in that order) and start the whole payroll process over. When you get to the Print Selected screen, you may update your check numbers to match the originals with an added alpha character.