Question

If commission is being paid out to an employee and the company withholds income taxes on...

If commission is being paid out to an employee and the company withholds income taxes on the amount of the commission paid, what would the company's Journal entires be given the following:

House was sold on Oct 15th, employee is being paid $3,000 in commission in November.

House Net Purchase price is 5,000,000 and there is a 2% brokerage fee (not being paid to employee).

The income tax withholding is 22%

Homework Answers

Answer #1

Date

Particulars

Debit ($)

Credit ($)

Commission expense

3000

       Cash

2340

       Income taxes withheld

660

(To record commission paid to employees)

House

5000,000

Brokerage at 2%

100,000

       Cash

5100,000

(To record purchase of house)

Note that instead of cash, bank can also be entered.

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