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Pauline

Need help Reconciling purchased PTO on Balance Sheet

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The company I just started with has PTO purchase via 125 plan, the deductions was set up to  hit GL as  CR to PR Liability. When or how is the Liability cleared?  Plan states all time has to be taken or lost.

What should happen when the employee uses the purchased Time off?

Seems to me we will have to do a manual entry to DR the Liability account and CR Wages, to correct the balance sheet.

Currently,When the employee takes any PTO, this is paid out to them as vacation time , or wages in effect and taxed as such.

I  need to confirm I am understanding  the DR and CR of this transaction. 

Where is the benefit , other than extra week off, with pay, they in effect purchased from the employer.

They have never reconciled the balance sheet , I am attempting to do that for EOY 2018 and this one item has me confused.

Thank you to anyone that will reply and explain this in clear T accounts 

Pauline

 

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I don't understand what you mean when you say the company has "PTO purchase via 125 plan."  Do you give them a choice to take PTO in cash or elect a pre-tax benefit?

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