Honestly? No actual solution was given.

I was similarly told to just go ahead and make journal entries to get the transactions into the correct account. I find it interesting, however, that it's just the net paycheck portion that is showing up in the wrong account. The actual payroll funds are being drafted from the correct account, and the payroll taxes are being reflected and drafted from the correct account as well. Unfortunately, somehow, QBO is putting the employee's paycheck amount into QuickBooks Checking, while everything else is working as it should. This confused all support agents involved as they went through the troubleshooting steps they had available at the time.

Now long story short, after this matter was escalated, the "solution" was later determined to be closing the QuickBooks Cash Checking account, and after it's closed (which takes 30-60 days apparently, even though our balance was already $0.00), inactivate the account in the Chart of Accounts, and this would then force the system to respect the settings in Payroll Settings > Bank Accounts and Payroll Settings > Accounting > Paycheck and Payroll Tax Payments. Whether this is going to work or not is unknown at this time, since I'm still waiting for the checking account to be closed... I must say though, thankfully we no longer need this checking account, because we're fortunate enough to have other checking accounts at our disposal. Had we needed this account to remain open, I'm not sure what the "solution" would have been then.

I'll also add that it was acknowledged by the main support agent assisting me that QuickBooks Online is "still a relatively new software" and that there are sometimes things that go wrong. I agreed with her, but stated that this had never been an issue in the past, and that I don't know who changed what, but that this issue was new (at least for our account).

Going forward, it doesn't look like they're going to work on this issue any further, rather they assume making journal entries is an easy fix for now.

I'll be leaving this matter open until a permanent solution is found...