Payroll at month-end: recording wages earned before the next pay date

Compare the pay period with the accounting month. A payroll paid in the next month can cover work performed in the closing month. Under an accrual policy, finance may need an entry for that earned cost before the cash withdrawal occurs.

Keep the payroll calendar and time records with the close inputs. Distinguish salaried pay, hourly work, overtime, bonuses, and commissions. One rough daily rate may not adequately explain every category.

Use approved time and compensation records to calculate the portion belonging to the closing period. Include related employer costs where required by the policy. Identify estimates and the basis used.

For illustration, a $20,000 payroll covering ten equal working days with four in the closing month suggests an $8,000 wage allocation if that basis fits the actual compensation. Overtime or uneven staffing can change the result. The example is a calculation method to assess, not a universal rule.

Define whether the accrual reverses automatically or is cleared against the actual payroll entry. Record that process in the close checklist. The next payroll should not leave both the estimate and full actual cost in the same expense total.

Compare the actual payroll with the estimate and explain a material difference. Preserve the adjustment support so a reviewer can follow the movement.

The pay date, tax deposit date, and benefit remittance date can differ. Tie the payroll journal to source reports, then explain the clearing and liability balances using actual withdrawals.

Do not use a bank debit as the only proof of wages earned. A debit may combine net pay, taxes, benefits, or provider charges.

Save the payroll period, allocation, entry, reversal or clearing, actual comparison, and reviewer approval. Note any missing time or compensation change with an owner.

Review the process when pay frequency changes, a provider changes, or headcount becomes more complex. A repeatable cutoff keeps payroll trends comparable and prevents the same period from being omitted or counted twice.