By your description of reversing the previous month it sounds to me that you are putting the total amount of outstanding holiday pay into your accrual, using method 2 of doing accruals but delaying the reversal (by doing the immediate reversal it won't get forgotten to be done) - see below.

You just need to reverse the journal from the previous month like normal, debit 2109, credit 6014 - it will not be duplicating your journal; at the end of the first month (January) you would again debit 6014 and credit 2109 with the total outstanding amount of holiday pay with the effect that any accrued holiday pay paid would be removed from the expense and any newly accrued holiday pay would be added.

The financial year end between the months is irrelevant to the normal getting the expense in the right month - it is just a means to reset the total of the expenses so that they give a total for the financial year.

For example:

Suppose it was the end of November and your total Holiday pay so far is £30,000; then:

1. Your total accrued holiday pay at the end of November is calculated to be £9,000;
2. During December you pay £1,000 of it but accrue another £2,000 (total = £9,000 - £1,000 + £2,000 = £10,000);
3. You do your year end clear down procedure;
4. In January you pay £3,000 of the accrued holiday pay, and accrue another £1,000 (Total = £10,000 - £3,000 + £1.000 = £8,000);

Assuming 6104 holds your holiday pay expense (and people are paid in the following month so there is no holiday pay of the current month to actually pay) and ignoring any other accruals, the journals for this would be:

As you can see, by reversing the whole amount as normal, and then accruing the whole amount as normal, the £1,000 amount of January's Holiday Pay accrual is exactly what is in 6104 (assuming 6104 is your Holiday Pay nominal) - a debit balance of £1,000.

The £3,000 of Holiday pay that was accounted in the previous year's expense is not there in the current year even though it was paid in this year - all the year end has done is remove the total holiday pay for the previous year (in this case £41,000 which included the £3,000 actually paid in January).

The two methods of doing accruals

1. shift the relevant amount each month; or
2. shift the whole of everything that will be invoiced/paid after the month end and reverse at the start of the next month.

With the first method, you would note how much of the holiday pay accrued in previous months was paid and then debit 2109 and credit 6014 with that amount.  Then at the end of the month you would work out how much extra holiday pay has been accrued in that month and then debit 6014 and credit 2109 with that amount.  Each month you are removing from the expense the amount of previously accrued holiday pay paid and adding the amount of holiday pay accrued in that month.

With the second method, you would note how much total holiday pay is outstanding and accrue it to the next month (debit 6014, credit 2109) and then at the start of the next month reverse it (debit 2109, credit 6014).  At the end of that month the total amount of outstanding holiday pay is again accrued.  The total outstanding holiday pay is the the previous total less the accrued holiday pay paid plus the holiday pay accrued.  The effect is the same as above.

The advantage of the second method is that the accruals nominal (2109) only holds a value round month end which is sent back to where it came from meaning you don't have to track what is in 2109.  The disadvantage is that you can't easily track the month expense until right at the end of the month (which is not so much a problem if you generate monthly MA).

Hi thanks for the reply, my problem is I have taken over a role from someone that has left, and how its been done in the past is every month the full journal is reversed out, so for the year end December 2023 - the journal put through for the holiday pay was 

DB 6014 £18049.76

DB 6015 £22671.83

CR 2109 £40721.56

The year end for 23 has been run and Sage YE journals have cleared the amounts in 6014 and 6014 in the P&L but obviously the £40,721.56 remains in 2109 but the account is clear for 6014 and 6015,  and as at December 2024 the balances on the account match what my outstanding holiday amount owed is, which is where my problem lies, how do I clear down the accrual. I have tried a dummy run of journals to do this, but the balance as of December 24 is incorrect on the P&L 

In January 2024 the accrual was put through for that month and reversed out in February and the a new amount for February was put in and that's done every month 

I worked on Sage for years, and never seen it done like this, which is why I am having problems 

At the start of 2024 the journal should have been reversed so that the balances at the start of the year were:

• 6014 £18,049.76 Cr
• 6015 £22,671.83 Cr
• 2109 £0.00

During January any holiday pay would have been Debited to 6014/6015 and at the end of January another full holiday pay journal would have been done.  The amount paid plus the new value would be more than the credit balances, so that after month end holiday pay journal was entered, the values in 6014/6015 would reflect the amounts of January.

That's the problem its not done like that, its just reversed in and out each month, no pay would have been deducted in 6014 and 6015 during the month, its just a accounting transaction

So January was debits as £25524.79 and 23845.08 - 2109 - £49369.87 Cr which were the correct amounts for January Holiday owed 

If I had put through the above the balance would only have been £7475.03 and -£1173.25
I'm not saying this is done correctly, but I have gone back over the years and its a mess !

Just checking, was all of that £49,370 accrued for holiday in January?  Or was some of it accrued in the previous year (to December 2023)?

If the former, what happened to the holiday that was accrued at the end of December 2023?  Has it been paid?   When it was/will be paid, where will the other half go?  To 6014/6015 or will you use 2109?

Paying directly from 2109 makes tracking previous accruals and what has happened to them difficult, along with a tendency to leave accruing errors (where the accrued amount doesn't exactly match the final expense) lying around which are difficult to track.

I have found a previous financial manager where I work (left before I joined) sometimes paid directly from the accruals nominal, and sometimes reversed and paid from the expense nominal for some things, and tracking down why there is now a balance where there shouldn't be one has been a headache.

What happens is a spread sheet is done for the holiday each month, so if it was all used there wouldn't be any need for an accrual at year end, The £49,370 was the holiday not used for December.  (we have one person that has a massive amount of unused holiday) I'm in the same position for 2024, as to where to clear down the 2109 account, as P&L was correct before I ran the year end at £49,370 reverse them as at 31/01 but the year end ledger has already but a credit through on both the accounts in the P&L so it ends up putting a credit through twice (I have actually brought my lap top in to run another copy to experiment )

As the Ledger year end journal goes to 3200 account, its the only place I think I can put them back to as it clearly shows in the Year End Report that a credit has been put through. I need to look at this for this year going forward for the best way to do 

At some stage the holiday brought forward at the end of December 2023 would have been paid in 2024.

The holiday accrual from 2023 would be netted against this payment so that the payment doesn't appear as an expense in 2024:

at the end of 2023, you knew £49,370 was an expense for holiday of that year so put it in the expense nominal with the other half in the accruals.

When that holiday was paid in 2024 where was the other half of the payment put?  Accruals (2109)?  6014/6015?  Another?

We use 2 nominals for our salary expenses: Payroll (P) and non-payroll (NP).

They are added together in the accounts - during the year everything from our payroll program (and only that) goes into P so that it is easy to reconcile the accounts journals to the payroll reports.  The NP nominal is used for everything else including holiday pay accrual.

At year end we put the HP accrual into the NP nominal and reverse at the start of the next year (so that there is nothing in the accruals nominal).  This gives the NP nominal a credit balance at year start.  During the year the holiday is paid through payroll and goes into the P nominal - this balances off some, if not all, of the credit balance in the NP nominal so that it is not counted in the current year.  At year end we put the holiday accrual in to the NP nominal - although the NP nominal itself may have a credit balance (particularly if the holiday accrual is smaller), in conjunction with the P nominal the correct amount is in the books for the current year and there is no left over amount sitting in the accruals nominal.

For example, we accrue £20,000 at the end of one year, adding it into our NP nominal; the following year we pay £150,000 for work that belongs in that year's accounts. At the end of the year £18,000 is the HP accrual.  This means the payroll expense for the new year will be £150,000+ £18,000 = £168,000.

At the start of the next year we reverse the accrual so that the NP has a credit balance of £20,000.  During the year we pay the £20,000 holiday pay to our employees along with £150,000 pay, so the P nominal has a balance of £170,000, containing the £20,000 holiday pay paid which belongs in the previous year accounts.  Added to the NP nominal, they cancel out: £170,000 - £20,000 = £150,000 = pay for the current year.  At year end we accrue the £18,000, so that the total pay expense is £150,000 + £18,000 = £168,000; the NP nominal finishes with a credit balance of £2,000, but when added to the balance in the P nominal of £170,000 this gives £170,000 - £2,000 = £168,000 which is the correct pay figure for the year,

At some stage the holiday brought forward at the end of December 2023 would have been paid in 2024.

The holiday accrual from 2023 would be netted against this payment so that the payment doesn't appear as an expense in 2024:

at the end of 2023, you knew £49,370 was an expense for holiday of that year so put it in the expense nominal with the other half in the accruals.

When that holiday was paid in 2024 where was the other half of the payment put?  Accruals (2109)?  6014/6015?  Another?

We use 2 nominals for our salary expenses: Payroll (P) and non-payroll (NP).

They are added together in the accounts - during the year everything from our payroll program (and only that) goes into P so that it is easy to reconcile the accounts journals to the payroll reports.  The NP nominal is used for everything else including holiday pay accrual.

At year end we put the HP accrual into the NP nominal and reverse at the start of the next year (so that there is nothing in the accruals nominal).  This gives the NP nominal a credit balance at year start.  During the year the holiday is paid through payroll and goes into the P nominal - this balances off some, if not all, of the credit balance in the NP nominal so that it is not counted in the current year.  At year end we put the holiday accrual in to the NP nominal - although the NP nominal itself may have a credit balance (particularly if the holiday accrual is smaller), in conjunction with the P nominal the correct amount is in the books for the current year and there is no left over amount sitting in the accruals nominal.

For example, we accrue £20,000 at the end of one year, adding it into our NP nominal; the following year we pay £150,000 for work that belongs in that year's accounts. At the end of the year £18,000 is the HP accrual.  This means the payroll expense for the new year will be £150,000+ £18,000 = £168,000.

At the start of the next year we reverse the accrual so that the NP has a credit balance of £20,000.  During the year we pay the £20,000 holiday pay to our employees along with £150,000 pay, so the P nominal has a balance of £170,000, containing the £20,000 holiday pay paid which belongs in the previous year accounts.  Added to the NP nominal, they cancel out: £170,000 - £20,000 = £150,000 = pay for the current year.  At year end we accrue the £18,000, so that the total pay expense is £150,000 + £18,000 = £168,000; the NP nominal finishes with a credit balance of £2,000, but when added to the balance in the P nominal of £170,000 this gives £170,000 - £2,000 = £168,000 which is the correct pay figure for the year,