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 $3,000 in commission in November.
House Net Purchase price is 5,000,000 and there is a 2% brokerage fee (not being paid to employee).
The income tax withholding is 22%
Date |
Particulars |
Debit ($) |
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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