Journal Entry to Correct 1099 issue

I have a client with a mess. Their prior bookkeeper used the payroll module to pay 1099 contractors. No taxes were taken out since she used an "addition" as an Other Payroll Item not Earnings. She did this so they could get direct deposit as if they were employees. Obviously that's not right.
On the old Intuit boards, someone had this exact situation and someone mentioned journal entries to correct this. The post is in a read-only area so I can't question it there.
Does anyone have any idea what journal entries would move this to a 1099 situation so 1099's can be printed and the payroll forms would have the correct number of employees?
I appreciate the help!

Best Answer - Chosen by the Community

Where were the "addition" monies expensed in the chart of accounts? If the amounts were expensed to "Subcontract Expense", you may not have a problem for 1099s. Run the 1099 report as if it were year end to see if any of the people paid through payroll are shown...

My bet is that they are not shown as they are "employees" in the module. You will want to credit the account that received the funds with each payroll. Use the employee name in the name column for that line of the entry. The second line will be a debit to Subcontractor Expense using the name of the individual who has been set up as a vendor. Remember, the names must be slightly different in QB, use a "-v" at the end of the indvidual's name to designate them as a vendor. The -v can be eliminated in reports and forms.

The adjusting transaction for the year can be made in one swell foop, sell boop, all at one time. Make the entry for the total amount of the payments for the calendar year.

If this answer resolves your issue, then please mark "Solved". They don't have an "Amused" button yet...

Bob Wesolowski