Commission Receivable Journal Entry

A commission is a fee that a business or individual charges for their services. The rate of commission is typically a percentage of the total transaction value, and it is paid by the party who receives the service. For example, real estate agents typically charge a commission of 5-6% of the home’s sale price.

Commission fees are common in many industries, including sales, insurance, banking, and real estate. They are often negotiable, and businesses may offer different rates to different clients. commissions vary widely, and there is no standard percentage that businesses must charge. Ultimately, the amount of commission is determined by the market conditions and the negotiation between the parties involved.

The company has to record the revenue base on the accrued basics. The recording will depend on the occurrence rather than cash collection. So the company has to record receivables when the service is provided to the customer.

After completing the service for customers, the company needs to record revenue on the income statement. It will depend on the service provided to the customer, not the cash collected.

Journal Entry for Commission Receivable

The company can make money by providing service to the customers. It is the income that the company make

The journal entry is debiting accounts receivable and credit sale revenue.

Account	Debit	Credit
Commission Receivable	XXXX
Sale Revenue		XXXX

The commission receivable is the current assets on the balance sheet. It is classified as accounts receivable. The revenue will be recorded on the income statement.

Example

Company ABC provides the services to the client and requires to charge a commission of $ 2,000. The service is completed based on the agreed term. However, the client is not yet made the payment, but ABC is preparing the monthly financial statement. Please prepare the journal entry for the commission receivable.

Company ABC has completed the service for the client, so it has to record the revenue on the income statement.

The commission is recorded as the commission receivable which represents the amount to be received.

The journal entry is debiting commission receivable $ 2,000 and credit sale revenue $ 2,000.

Account	Debit	Credit
Commission Receivable	2,000
Sale Revenue		2,000