Commision received in advance journal entry explain
Answers
Answer:
cash a/c dr 7000
to commission a/c 7000
Explanation:
(Being commission receive in advance)
Income A/c……dr
To Commission/Income received in advance a/c
Explanation:
In this particular question the Commission that is received in advance is considered to be an unearned income. Since the benefits that the company is supposed to receive, will be received later and making it belong to the next accounting years transaction makes it a liability to the company.
The golden rule of accounting says that when the liability increases we should credit. Therefore we credit the commission received in advance account and debit the income account denoting that we will receive the amount it in the future.
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