Help me with this reversing entry

  • Creator
    Topic
  • #1886239
    nolan7120
    Participant

    You incur commission expense on 12/25 that won’t be actually paid until 1/25. I know the “to record” and “to pay” entries are correct, but what would the closing entry and reversing entry be? Thanks

    To record:
    12/25 Commission Expense xx
    Commission Payable xx

    To close:
    12/31

    To reverse:
    1/1

    To pay:
    1/25 Commission Payable xx
    Cash xx

    FAR (6/9/16) - 81

Viewing 5 replies - 1 through 5 (of 5 total)
  • Author
    Replies
  • #1886242
    nolan7120
    Participant

    That is not how it's supposed to look lol. The bottom half of each entry should be indented to represent the credit but somehow the format got messed up.

    FAR (6/9/16) - 81

    #1886260
    nolan7120
    Participant

    Ok, someone please tell me if this is correct:

    To record:
    12/25 Commission Expense xx
    Commission Payable xx

    To close:

    12/31 Income Summary xx
    Commission Expense xx

    To reverse:

    1/1 Commission payable xx
    Commission Expense xx

    To pay:

    1/25 Commission Expense xx
    Cash xx

    I think this is correct but would like confirmation:) Again, if once I hit submit and the entries look weird, the bottom half is the credit obviously.

    FAR (6/9/16) - 81

    #1886398
    Anonymous
    Inactive

    Why would you need to reverse/close the entry? You expense is captured in Yr 1(since it was incurred and accrued on 12/25) and your payable is relieved in Yr 2 when the cash is paid.. If you are manually closing out the year, i would think all the income items are reversed against retained earnings to close it out? (I have never had to do it manually, that's why I am probably confused)….

    #1886518
    Bperk09
    Member

    YR 1
    DR commision expense
    CR commision payable

    YR 2
    CR commision payable
    DR cash

    The commission expense in yr 1 will be closed to RE at year end. You shouldn't be booking it again in yr 2

    #1886857
    Bperk09
    Member

    Whoops, typo. Meant to say

    DR commission payable
    CR cash

    For year 2.

Viewing 5 replies - 1 through 5 (of 5 total)
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