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.