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AE for Revenue in Advance

Explain the c...

Question

Explain the commission received in advance journal entry. - Commerce Q&A

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Solution

The commission received in advance journal entry is know as unearned income. It is the income that is received in advance to the benefits which are yet to be provided. Journal entry for income received in advance recognizes the accounting rule of “Credit the increase in liability”.

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Q. Give journal entries for the following adjustments in final accounts:
(i) Salaries ₹ 5,000 are outstanding.
(ii) Insurance amounting to ₹ 2,000 is paid in advance.
(iii) ₹ 4,000 for rent have been received in advance.
(iv) Commission earned but not received ₹ 1,000.
(v) Interest on capital ₹ 1,500.
(vi) Interest on Drawings ₹ 300.
(vii) Write off ₹ 2,000 as further bad-debts.
(viii) Closing Stock ₹ 3,000.

Q. Classify the following accounts under personal, real or nominal accounts:

(i) Commission Paid	(ii) Commission Received
(iii) Commission Accrued	(iv) Prepaid Salaries
(v) Leasehold Property A/c	(vi) Discount Allowed
(vii) Carriage Inwards A/c	(viii) Life Insurance Corporation of India
(ix) Drawings A/c	(x) Rent Received in Advance
(xi) Debtors	(xii) Sales A/c
(xii) Rent Paid in Advance	(xiv) Bank Overdraft

Q. Write a journal entry reflecting the affect of adjustment in periodic statment (i.e,Trading & P/ L A/C ) when books of accounts are closed with respect to commission received in advance.

Q. where will you write interest received in advance in opening journal entry ?

Q11)

Q11. Give journal Entries for the following adjustments in the final accounts :

(i) Insurance amounting to Rs. 2,000 is paid in advance.

(ii) Commission earned but not received Rs. 1,000.

(iii) Closing Stock Rs. 3,000

(iv) Rs. 4,000 for rent have been received in advance.

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