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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 the 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 | Amt | Personal | Debit- The Receiver | |
| To Commission Received a/c | Amt | 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 | Amt | Asset | Debit- The Increase in Asset. | |
| To Commission Received a/c | Amt | 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)