What is the journal entry to adjust commission expense?
Most companies will calculate actual commission expense by multiplying net sales by a a commission rate. For example, if the company had $15,000,000 of net sales and a commission rate of 3%, commission expense would be $450,000.
So the company may already have a liability for accrued commission on the balance sheet based on estimates. At the end of the period, the company would record an adjusting entry to adjust commission expense and accrued commission to be based on actuals. So if the company had unadjusted commission expense of $400,000, and actual commission expense was $450,000, the company would record an entry to increase commission expense by $50,000. The debit would be to commission expense for $50,000 and a credit to accrued commission for $50,000.
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