In January a benefits scheme was introduced to the employees. After one year of service they can join and the employer will fund level one of the health insurance which costs £5 per employee per month. Employees can pay additional voluntary contributions for a more enhanced cover and many have done this.
The deduction for the AVC has gone through payroll and therefore reduced their respective net pay's. Obviously I cannot meddle with the net pay figure as this contra's with the bank payments to equal zero each month.
I set up a new nominal code on Sage = 6004 - the invoices from BHSF have been posted to this nominal so I need to post the figure received from the employees to this account.
So, my question.... I can see I need to credit 6004 with the amount but what do I debit please?
The journal entry for the payroll should be something like this for one employee:-
Dr Gross Wages XXX (Profit and Loss Account)
Dr Employers NI XXX (Profit and Loss Account)
Dr Health Insurance XXX (Profit and Loss Account - equate to the £5 THE company funds)
Cr PAYE/NI Control XXX (Balance Sheet)
Cr Net Pay Control XXX (Balance Sheet)
Cr BHSF Creditor XXX (Balance Sheet - equate to the £5 the company pays PLUS the AVC)
Account 6004 is a profit and loss account code in Sage. The company will act as agent for the AVC (just like VAT) and should go in the Balance Sheet. The AVC is not a company expense!
