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journal entry of Commission Receivable and ajustment entry also

asked Apr 18, 2016 in Journal Entries by PARDEEP (12 points) 5,267 views

1 Answer

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Example:  Ram is running a business of commission agent.  At the end of the accounting year Rs.2000 is receivable from Shyam on account of commission.  Journal entry for this will be:

Accrued Commission A/c      Dr.   2000

   To Commission A/c                                   2000

(Being commission receivable from Shyam)

Note:  The above journal entry has two aspects:

(i)  Ram has earned a commission of Rs.2000 but which he still has to receive from Shyam.  So accrued commission is an asset, hence it is debited (Rule for assets is debit when assets increase and credit when assets decrease)

(ii) Commission earned is an income, hence credited (Rule for all incomes and revenues is: Credit all incomes and revenues)
answered Apr 18, 2016 by jbsclasses (3,971 points)