 QuickBooks Online 2023. Interpayroll for second month adjustment. Get ready to start moving on up with QuickBooks Online 2023. Here we are in our get great guitars practice file. We started up in a prior presentation using the 30 day free trial. We also have opened the Free QuickBooks Online sample company. If you want the two open at the same time, we suggest using incognito window or another browser. You can open incognito if using Google Chrome by selecting the three dots in the browser, incognito window. Support accounting instruction by clicking the link below, giving you a free month membership to all of the content on our website, broken out by category, further broken out by course. Each course then organized in a logical, reasonable fashion, making it much more easy to find what you need then can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files, and more like QuickBooks backup files when applicable. So once again, click the link below for a free month membership to our website and all the content on it. Typing into the Search Engine QuickBooks Online Test Drive. We're using the sample company to compare the accountant view, the one Get Great Guitars is in, and the business view, the one the sample company is in. You can toggle between the two views by selecting the cog up top and the view down below. Open up a couple tabs by duplicating to put reports in. Right click on the tab up top to duplicate it. We're going to right click the tab up top to duplicate it and then go back to the tab to the middle. Let's open the reports on the left hand side and we're going to take a look at one of the favorites, that being a balance sheet report, by the way, in the business view, the reports are located over here in the business overview and then the reports. Back to the accountant view, back to Get Great Guitars tabbing to the right. We're going to go down to the reports on the left, open up the profit and loss like we do every time, close the boogie, that's the hand boogie by the way, and change the range from 010123 to 022823. And let's run it to, hold on, hold on, let's take a look at it on a month by month breakout. That's what we've been doing. Then run it to refresh it. We've got Jan, Feb, Tote, and then tab to the middle, close the boogie and change the range from 010123 to 022823. Run it to refresh it. That's the setup process we do every time. Last time we processed the payroll. So we turned on the payroll in our practice problem as part of our 30 day free trial practice problem, which is great. And then we entered the payroll, setting up the payroll, entering the payroll in the payroll tab on the right hand side. Now remember, there's two ways you can enter payroll. You can enter payroll by processing it through the QuickBooks system, which means you have to pay to turn on the payroll. We didn't because it was free for 30 days, but once you're paying for it in practice, you'd be paying for the payroll, or you can have a third party provider process the payroll and deal with the paychecks and all that kind of stuff and the reports in the 940s and 941s, the W-2s and W-3s. And then you enter the information in some way, shape, or form as a lump sum or a total to make your financial statements correct so that you can do the reporting possibly necessary at the least for tax return preparation at the end of the year. Now, one of the complications with doing a practice problem with payroll is it's kind of hard to make a generic practice problem because it's trying to be specific to a particular location, like California for example, and a particular company could have differences between obviously one payroll versus another payroll for things like workers comp and that kind of stuff. And it's hard to deal with the timeframe because payroll is one of those things that you want to generally run in real time. And so to try to work a practice problem in a different timeframe or run a full year's worth of data through payroll can be difficult because payroll also changes from quarter to quarter because there's caps in things that happen on like social security and the federal income tax in particular, which kind of throw things off when you try to compare the prior quarter to the future quarter. So we've got a whole course on that but the general idea is you usually want to have the same payroll if possible system for an entire year. If you plan on switching the payroll system, it would be best to do at the beginning of the year so you can have entire years worth of data in one system so that the system can account for the caps and all that kind of stuff and populate your reports properly from the system. That's one thing to keep in mind. Also, if there's an error, if there's a problem with the payroll, then we cannot as easily just go into the payroll check that has already been generated and make an adjustment to it because it won't let us do it in some cases, number one and number two, if we make those kind of adjustments, our payroll reports might not tie out. So if I go to the tab to the right, right click on that tab and duplicate that tab and I'm gonna go down to the reports on the left-hand side just to let you know what I'm talking about before I do exactly what I'm telling you not to do. So we're gonna go down to the payroll reports down below and this is gonna be the, let's go to the payroll summary by employee report, for example, it's not opening, open up. I'm gonna take a look at this for the year from 0101 to 3 and then apply it. So this report is basically like the information that will be used to populate to your 941s and your 940, your W2s and your W3s. If you make a change to the payroll that doesn't get reflected on these reports, then your 941s, your 940s and what not most likely will not tie out to what's on your financial statements. That's a problem. Okay, so given that, we're gonna basically violate that problem because in our practice problem, we wanna match the practice data we put in place that matches out to our bank reconciliation. So I'm gonna try to do an adjustment here. So one way I can do it is I could find the paycheck. One way I can do it is I can go into my cash account here. I'm gonna scroll down and let's say that we have our paycheck down here. Here's our two paychecks and let's say that this Adam Hamilton, I'm gonna say is wrong for whatever reason. I'm gonna go into it and see what kind of things they would allow you to change even though I would recommend voiding the check and then processing the payroll again, typically to change something. So if I go into here, then I have an edit capacity down below that gets you back into your edit tab. And then these items are the only ones they kind of allow you to change because the Medicare and Social Security should be populated automatically based on the salary information. So I'm gonna go in here in our practice problem. I entered this incorrectly, 720. I'm gonna try to change that. Again, if I was doing this in practice, I wouldn't do it here. I would actually void the check and try to reprocess the check I think would be the general way to go so that you can make sure you don't mess up the payroll reports. But in the practice problem, I'm gonna make that change here and then say okay. And so okay. And okay. So that has been done. Now there was also a miscalculation in our practice problem for the Social Security, which I believe is $60 different. So I'm gonna have to make an adjustment for that as well. And I can't make it in the system because the Social Security and Medicare are being calculated properly automatically from the gross pay. So now I'm gonna make basically another entry to record this adjustment. And this is one which would definitely throw off your differences between your reports. So you wouldn't do this in practice, but I think it's actually a good thing to do in a practice problem because it'll show us the differences and how it will throw you off and why you don't wanna be recording something directly to one of these accounts because it'll throw you off. So let me show you what I mean. I'm gonna put this back in, this tab back to the balance sheet, which is under the reports and then the balance sheet. And then let's change this back from 010123 to 022823 and run it, close up the boogie. I'm gonna do this in the first tab. Now back to the first tab, let's go to the register to execute this improper action. We're gonna go to the accounting and then the chart of accounts. And if you're in the business view, by the way, that happens to be located over here in the bookkeeping area, bookkeeping chart of accounts. Okay, and then I'm gonna close up the register. I'm gonna go into the register for the check-in account because that's probably the easiest way to enter it. And I've got the last transaction. So I've got my latest transactions up top here. I think that's the default. You can sort by date differently up top but I've got my latest one and I'm gonna make adjustments to these two here. This Adam one, for example, there was an error with the withholdings for social security compared to our example problem. So I'm gonna make another transaction that's gonna have the same check number because I'm trying to make it so when we do the bank reconciliation, we'll be able to see that one check number and tie out our bank recs because the bank recs have already been created. So that's gonna be what we're doing. I'm gonna hit the dropdown and I'm gonna make a check. And I'm gonna use the, I'm gonna make it as of 02, 28, 23, same check number which is 102, 2. I'm gonna make it to Adam again, Adam Hamilton. And this is gonna be to adjust payroll, I'll say $60. So it's memorizing because we did the same thing last time. And there it is. Now, so now I'm recording something to the checking account and to the payroll that isn't being processed through payroll. So whether I do it with a check form or whether I do it with a journal entry or whatever, anytime I do that, the system's not gonna be able to pick it up in the sub ledger reports which are being used to create the 940s and 941s. That's the problem that would throw off the sub ledger reports. So that's why you wouldn't wanna do this in practice but it's probably actually a good exercise to do in a practice problem. So let's save it. It's gonna say, hey, there's already a check number 1022. That's correct. I'm gonna say I know that but I wanna do it again because I'm trying to show that when we do our bank reconciliations that'll help us out. Now, because the social security was messed up and that messed up the employee portion, it also messed up the employer portion. So the employer portion of social security doesn't have anything to do with cash. It's just gonna increase the liability account here and then the other side goes to the taxes. So I'm gonna make that adjustment with a journal entry. So I can do a journal entry with the use of the registers in a similar fashion. So if I go back into my accounting on the left hand side and I go into my registers, I'm not gonna use the cash register though. Every other account has a register that's a balance sheet account. And so I wanna adjust the liability account for payroll liability and I'll use a register to enter the journal entry instead of, because if there's only two accounts that are impacted, that's an easy way to go. So payroll liabilities, there it is. I want to adjust this one. So I'm gonna say, let's use that register and I'm gonna say, let's enter a journal entry. And this is gonna be as of 022823, journal entry five, that's fine. I'm not gonna put anything there. This is gonna to adjust payroll and we're gonna say that was for $60. Actually, it's a decrease of 36 because of the two issues with the federal income tax and the social security. So then the other side is gonna go to the payroll taxes. So taxes, it's under pay taxes paid. We're looking for the payroll taxes. So let's say payroll, payroll expense taxes. That's easier to get it that way, payroll expense taxes. So I believe that should do it. So let's save it and then check out where we stand. So if I go then to the balance sheet and we run it again, now we've made an adjustment to the checking account. And if I go into the checking account, then we've entered an adjustment. Now it doesn't look like a paycheck. So that's how you can kind of tell that there's gonna be something that was entered to an employee that wasn't done through kind of the payroll system because it wasn't done with the special paycheck, even though that's still kind of a check tied up a form. And then I'm gonna go up top and say back. The other side, we entered something to the liability account here. So if I go into the liability, the federal income tax. Now we've got this adjustment with a check. Once again, it's not being made with like a payroll check. And I've got this adjustment with a journal entry, which again, isn't exactly a payroll check. So I can kind of see if I was reviewing someone's books because their financials aren't tying out to what's on the payroll reports. These would be the things that would call attention. You know, you can go, oh okay, what happened with those transactions? And then I'm gonna go back. And then on the other side on the income statement or profit and loss under the payroll, we made an adjustment to the taxes here. So we made an adjustment again with a journal entry here on the taxes for that one. So there we have that. And I think we made one here on, no, this one's good on the wages. All right, so that's gonna be the adjustment. Now the problem is of course, even if those adjustments were correct and I made my financial statements correct, I'm going through it. I'm saying now I made my financial statements right. If I don't do it properly and I don't adjust the payroll forms that are gonna be used to create the financial statements, then it becomes kind of an issue. So if I was doing my payroll from like an ADP and just making my financial statements correct, then that wouldn't really be a problem. But if I'm using QuickBooks to generate the 940s, then, and I don't make the adjustments properly through the payroll system, then these reports used to make the 940s will not be right. And that's the issue. So the gross pay now is at the 139.66. If I put this in there 022823 and apply it just to refresh it, 139.6666. So that should tie out to the payroll here, 139.6666. However, if I look at the employee taxes, or let's look at the employee taxes, let's pull out the trustee calculator. They got a total of the 3208.45 minus. If I go over here, we've got the taxes of, these are the employee taxes. Hold on a sec. Let's do the employee or taxes. The employee or taxes come out to a total of 1068.45 minus. And if I go back on over here, minus the 972.45, right? There's a difference because of the two payrolls that we've been, we've processed this time. We've made those adjustments to it. And then if I go to the first tab, the balance sheet, we currently have a liabilities for the two payrolls that we haven't yet paid, which we're gonna pay January's soon. So we'll pay the liability that has been generated from January soon. But since we haven't paid it yet, you would think that the total liability should tie out here for the employee and employee or portion. In other words, the employee portion was the 3208.45 for the two payroll periods, plus the employee or portion is employee or taxes plus the 1068.45. So you would think the total liability right now would be that, but we have this here. So minus the 4080.90. And so we have this difference again, in part because we made adjustments directly to the general ledger accounts without adjusting the payroll. So again, you don't wanna do that in practice. We're doing it in the practice problem so that our bank reconciliation will tie out because they were created in advance. Okay. Now before we finish up, we're gonna make one more adjustment here. So hopefully there was a note at the beginning of the video to let you know about this. We're gonna go into the checking account and that first adjustment that we made, if we go down that $60 one, which is down here, I'm gonna go back into that $60 one. And I actually wanna put that in place because of the change between the two of them for the amount of, it should be 36, 36 because of that should be 36. So now I'm gonna save that adjustment, save it and close it. Okay. So I think we are finally good tying out to the bank reconciliation. Let's open up the trial balance now so you can check your numbers and see if they tie out to the mess that we've just put together here. Hopefully everything's running and rolling smoothly. So let's go back to the tab on the left-hand side into the reports and type in trial balance, close up the buggy and change the range. 010123 to 022823. And then let's see it on a side-by-side, month-by-month and run it. And this is where we stand. If you stand, if you're in the same spot, great. If not, then try to expand the date range. See if it's a date range issue and we will be doing transaction detail reports at the end of the second month of data input to further drill down on any differences.