Payroll expense year end entry

[Samsun683]

Hi 

cash basis company . Payroll check written to employee and mailed on 12/27/21. Check was not deposited until 1/6/22.  What is the 2021 journal entry to record this expense? I thought no accounts payable allowed when cash basis

[AliciaP1]

Payroll is reported as an expense when the check is written.  It is expensed and credited to cash and does not constitute an accrual.  It is merely a reconciling item on your bank account as an outstanding check at 12/31.

[Samsun683]

Thank you! 

For checks I received as business payments that didn’t clear yet, are those money in transit accounts with a reversal entry in January? Or do I just call it income and cash? I use waveapps for my bookkeeping and it wants me to do money in transit in order for the internal reconciliation from my imported bank statements to reconcile 

[DaveF1006]

Yes, for income tax purposes, these are consider income and cash assuming that  these checks were paid in posted in December but didn't clear until January.