Debit Credit Recurring and Adjusting Entries?
Anastacia asked:
lets say you collected cash for commissions from clients for properties sold the prior month. What would you debit and what would you credit?
This is for a realty Corporation. I chose a debit to cash and a credit to commissions revenue. I am not sure if that answer is correct because this is all to confusing to me at the moment.
lets say you collected cash for commissions from clients for properties sold the prior month. What would you debit and what would you credit?
This is for a realty Corporation. I chose a debit to cash and a credit to commissions revenue. I am not sure if that answer is correct because this is all to confusing to me at the moment.
October 28th, 2009 at 2:56 pm
More in-depth response after your additional information:
I figured it had something to do with Real Estate, in that case I beleive the first paragraph in my previous answer covers your question.
On a Listing Contract, the Commission is identified as a Lien against the property upon an accepted purchase offer. Therefore it is a debt to be paid at the closing, or will continue to be a lien after closing if it is not paid at the closing – when other arrangements are made.
I hope this helps.
My 1st Response:
Humm. First, I have two questions for you, 1. Is this property real estate? 2. If this is a real estate transaction WHO AM I – the agent, the broker, the financier, or individual seller? This is a tricky question.
Real Estate – The broker (in some states) is usually the one permitted to charge and collect money and not the agent. In addition, a credit is like Earnest Money already received and deposited, awaiting the transaction to close. Upon the close, those monies are a credit to the purchaser towards the purchase price. A Debit is something still to be paid, like a commission. Upon the conclusion of the transaction (or sale), the commission then becomes due & payable.
If I were not a sale person, I would consider it all Credit except minus what would be required for applicable taxes later on. In today’s monies that would be roughly 20-30% debited or due out. I did not see any shortcomings or open liabilities list in your question. Unless there are hidden pending deductions or there is a different meaning for business transactions, I do not see what you would debit. Is there more to the situation?
I would like to know if this is not the correct answer. Good luck.