AccountancyNEB 2080
Prepare adjustment entry of accrued commission Rs. 28,000. [1]
1Answer
Adjustment Entry:
When commission is accrued (earned but not yet received), it must be recorded to ensure the accrual concept of accounting is followed. The adjustment entry is:
| Particulars | L.F. | Amount (Rs.) | Particulars | L.F. | Amount (Rs.) |
|---|---|---|---|---|---|
| To Commission A/c | 28,000 | By Commission Payable A/c | 28,000 |
Explanation:
- Commission A/c (Dr.) is debited to recognize the expense (as it is earned but not yet paid).
- Commission Payable A/c (Cr.) is credited to record the liability (as the amount is owed but not yet paid).
This ensures the Income Statement reflects the expense and the Balance Sheet shows the liability.
Discussion
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