Reversing a Payroll Check from a closed quarter in MAS 90

I ran into a situation today with a client. Employee had received a payroll check in February, but had lost the check. The employee reported it to the employer just this week (wish I could go 8 months without missing my pay check!). Of course, the employer wanted to reverse the February check and issue a new paycheck to the employee. Unfortunately, MAS 90 doesn’t allow the reversal of a check posted in a closed period in the Payroll module.

First, my rant: Since it is impossible to run a payroll in a new quarter without first closing the prior quarter, it stands to reason that, at some time, a MAS 90 user will have to reverse a prior week’s pay check in a closed period. It makes no sense at all that it is impossible to do so in the software. That’s right – Sage Support told me it is IMPOSSIBLE to reverse the check when the check date is in a closed period. Okay – Rant off.

My client thought, “No problem, we’ll simply reverse the check in the current period and issue a new check to replace it.” However, the problem is that MAS90 will not update the check register if the original check date is in a closed period. It doesn’t matter that we are trying to perform the reversal within the current period. Because the check was written in a closed period, there is nothing we can do with it.

So, here’s our workaround:

We created the employee as a vendor in Accounts Payable, and set the default GL account for the Vendor as a Payroll Suspense Account. Then, we used Manual Check Entry to both create a reversal for the original payroll check and to issue a new check for the amount of the original net payroll check. Here’s how:

In Manual Check Entry:
> Enter the Bank Code as the Payroll Bank Code
> Enter the original paycheck number as the check number
> Enter the Vendor created for the Employee
> Enter the net paycheck amount as a negative
> Enter a comment referring to the payroll reversal
> On the Lines Tab, select GL Distribution; the default GL account assigned to the Vendor will be offset with the check amount
> Click Accept
> Use Quick Print to enter a new check, using the same Bank Code and Vendor
> Enter the net paycheck amount as a positive number
> Again, enter as a GL Distribution amount; the default GL account will be offset with the check amount.
> Click Accept, print the check, print the Manual Check Register and update.

The net result is debit and credit entries to both the Payroll Checking GL Account and the Payroll Suspense Account – a wash in the G/L. In Bank Reconciliation, a record is created with the same check number as the original Payroll check but with a negative amount equal to the amount of the original check. This allows you to clear the two checks from the bank rec since they cancel each other out.

It’s not pretty, but it resolves the problem.

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