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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 oRead more
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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Salary is an indirect expense incurred by every organization as consideration for the efforts undertaken by the employees of the organization. It is one of the most recurring transactions because it is paid monthly. It is usually paid by cheque or through netbanking. Here, I will explain you the jouRead more
Salary is an indirect expense incurred by every organization as consideration for the efforts undertaken by the employees of the organization. It is one of the most recurring transactions because it is paid monthly. It is usually paid by cheque or through netbanking.
Here, I will explain you the journal entry for salary paid by cheque.
Journal entry for paid salary by cheque
I will present the journal entry using both the golden rule and the modern rule of accounting.
1. According to the “Golden rules” of accounting
(Being salary paid by cheque)
2. According to the “Modern rules” of accounting
(Being salary paid by cheque)
Example
Samsung Inc. paid salary amounting to 250,000 to its employees by cheque for the month of March 20xx on 31/03/20xx.
Journal entry in the books of Samsung Inc. on 31/03/20xx will be as follows-
(Being salary paid by cheque for the month of March 20xx)
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