Hi all. Sorry to bother you during festive season. I have an employee who has a centralised attachment of earnings order. Each month company sends a cheque to her creditor. Effectively it is not an expense as the same amount of money is deducted from her net salary. The question is how do I record it on sage?
When you're posting the payroll journal, you could credit the net wages nominal code with both the total net wages (to be paid to employees) and the attachment of earnings order figure (this being, in effect, the net wages that would be paid to employees if the attachment of earnings order didn't exist). You could then post the cheque that you send to her creditor to the net wages nominal code.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
For more precision you could create a separate "Attachment Liability" account on your balancesheet, with a code number near the net wages number. Then credit the attachment to that account rather than to the net wages account. Then when writing the payment to the creditor debit the attachment liability account. This kind of approach can be helpful keeping track particularly in larger companies that might have multiple such attachments, and also other 3rd party creditors such as pension companies.
Thank you Robert and Tom for taking your time to answer my question. I am with you but my predecessor has been inputting payment forms from creditor as suppliers invoices allocating them to 7009- Adjustments and producing supplier bank payments each time chq was sent. How can I rectify this situation. I understand how it should be done from your replies. Shell I just delete all the previous transactions and do it properly?
P.S. I spoke to a person who does payroll- she deducts the CAP amount from the net wage, so it is accounted for on our payroll system. I guess all I have to do is record correctly the payment to creditor side of it. Sorry if it sounds confusing.
