12/31 payroll direct deposit liability, paid 01/03, Cash bas

Technical topics regarding tax preparation.
#1
MLI  
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4-Jun-2014 12:28pm
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Seattle
Cash Basis client uses QB payroll service.

• $35k of direct deposit paychecks dated 12/31/19. (Included in Employees 2019 W2s.)

• Cash basis balance sheet on 12/31 shows the liability account: Direct Deposit Liabilities $35K.

• A “liability check” for $35k was created by QB Payroll Service to clear the liability.

• The check is dated 01/03/2020, but the memo entry says: “Created by Payroll Service on 12/31/19.”

It appears to be an electronic payment created by the payroll service, not really a check.

So is this a 2020 check or a 2019 check?

Options:

• Move liability to cash section as outstanding checks.
• Or is this a 2020 deduction?

I am inclined to do option 1, but not without reservations. Looking for assurance or absolution. :D
 

#2
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25-Apr-2018 9:24am
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Des Moines, IA
Is the paycheck in question captured on the 2019 Q4 941? Assuming it is captured and reported on the 941/W2 then it will be considered a 2019 deduction, you can book the net check to a liability account or understate the bank account.
 

#3
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Location:
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Thanks! That makes sense. The electronic payment date of 01/03 is confusing, but these seem like outstanding checks that are dated 12/31.
 


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