Expert: Shirley McAllister, CPP, PHR - 8/29/2011

Question
Hi-
Thank you for you answer!!!  I still have an issue with the forfeiture account.

My boss always write a check for the difference that he has to pay for the  employer Match but when he has a balance in the forfeiture account he writes the check for less amount.
for example, the employers match is $700 he writes the check for 400 and the remainder balance of $300 comes from the forfeiture account.

I have to create a suspense account ?
or the $300 has to get in as a credit first for the employer cost because it is a liability but what other account i should use ?  Suspense Account? Then, I have to create the journal entry :
         300 payable (credit)
        300 debit (liability) employer cost
I

Answer
The forfeiture amount is a debit in the 401K credit account. When you take it out of that account you simply credit the account which reduces the debit of the foreiture amount.

I have two accounts 401K payable and 401K employer expense

21165 is 401K payable
80900 is 401K employer expense

I would credit the 21165 as the forfeiture is a debit in that account and I would credit the 80900 which is the employer expense account.

Shirley