How to solve journal entries Commission received in questions accounting
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Answer:
Since , this Commission is received in advance before any work has been done , it will be considered as a liability on us , until such work is done for which the commission is being received in advance . So the entry will be.
Bank/cash Ac._________________Dr. Xxx
To commission Ac _____________________. Xxx
Note - you can write this above “commission Ac” as “commission received in advance Ac”. Both are right , but writing “commission received in advance Ac” is not normally followed by companies.
If , such work is not done till the year end , it will be termed as liability and will be shown on liability side of balance sheet under current liabilities . However if such work for which the commission is received in advance has been performed (before balance sheet date ) then such commission will be shown as income in Profit and loss account or Income statement.