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Sapna Takia
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What is journal entry for commission received?

commission receivedjournal entry
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    1. Commission Received refers to a percentage amount received by the company (or) an individual on the total sales incurred. It is an indirect income/revenue recorded on the credit side of profit and loss account. The term “commission” is more likely used in the stock market which is paid to a broker on the sale of shares (or) securities.

      Journal Entry for Commission Received

      Nowadays many organization uses a bank account for every business transaction i.e., either to make or receive payment. The journal entry on the commission received can be recorded in two different approaches of accounting. They are

      1. Traditional Accounting Approach

      Particulars L.F. Amount Nature of Account Accounting Rule
      Bank a/c   XXX Personal Debit- The Receiver
       To Commission Received a/c    XXX Nominal Credit- All Incomes and Gains

      (Being commission received)

      2. Modern Accounting Approach

      Particulars L.F. Amount Nature of Account Accounting Rule
      Bank a/c   XXX Asset Debit- The Increase in Asset.
       To Commission Received a/c    XXX Income Credit- The Increase in Income.

      (Being Commission received)

      Example

      On 1st March, Anna Ltd. received a commission amounting to 70,000 through cheque. Journalise the following transaction.

      Date Particulars L.F. Amount Nature of Account Accounting Rule
      1st March Bank a/c   70,000 Asset Debit- The Increase in Asset
         To Commission Received a/c    70,000 Income Credit- The Increase in Income.

      (Being commission received through cheque)

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