The main income of the trading company is sales revenue; and service providing company is service revenue.
Other than sales and service revenue income is known as other income.
A firm can earn different other incomes from business and investment.
Some regular other incomes are discount received, interest received, commission received, dividend received, rent received etc.
Keep in mind
Transactions |
Debit (expenses) |
Credit (income) |
Discount |
Discount allowed |
Discount received |
Interest |
Interest paid |
Interest received |
Commission |
Commission paid |
Commission received |
Dividend |
Dividend paid |
Dividend received |
Rent |
Rent paid |
Rent received |
Cash account |
Dr |
Income received in cash |
Increase in assets |
Bank account |
Dr |
Income received by cheque |
Increase in assets |
Income receivable account |
Dr |
Income earned but not received |
Increase in assets |
Accrued income account |
Dr |
Income earned but not received |
Increase in assets |
To Income account (by name) |
|
Name of income head |
Increase in income |
(Being- income received or receivable) |
|
|
|
Journal Entry
In the book of ……………
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Cash account |
Dr |
|
xxxx |
|
|
Bank account |
Dr |
|
xxxx |
|
|
Income receivable account |
Dr |
|
xxxx |
|
|
Accrued income account |
Dr |
|
xxxx |
|
|
To Income account (by name) |
|
|
|
xxxx |
|
(Being- income received, earned or receivable) |
|
|
|
|
|
|
|
|
|
|
Keep in Mind (KIM)
Incomes are credited in journal entry. Some regular incomes are: Discount received, interest received, commission received, dividend received, rent received. Income earned but not received till account close in known accrued |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
PROBLEM: 14
BRB Trading House has following transactions:
3 September, Discount received in cash Rs 3,200.
6 September, Interest received on investment Rs 10,000 by cheque.
9 September, Commission receivable Rs 2,000.
12 September, Dividend received on investment in shares Rs 3,000 through bank account.
15 September, Rent received on sub-let Rs 12,000.
18 September, Accrued commission Rs 5,000.
Required: Journal entries
SOLUTION
Journal Entry for American Style
Date |
|
|
Debit $ |
Credit $ |
Sep, 3 |
Cash account |
|
3,200 |
|
|
Discount received |
|
|
3,200 |
|
To record discount received from creditor |
|
|
|
|
|
|
|
|
Journal Entry for European Style
Date |
|
|
|
€ |
€ |
Sep, 3 |
Cash account |
Dr |
|
3,200 |
|
|
Discount received |
|
|
|
3,200 |
|
To record discount received from creditor |
|
|
|
|
|
|
|
|
|
|
Journal Entries
In the book of BRB Trading House
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
3 |
Cash account |
Dr |
|
3,200 |
|
September |
To Discount received account |
|
|
|
3,200 |
|
(Being- discount received in cash) |
|
|
|
|
6 |
Bank account |
Dr |
|
15,000 |
|
September |
To Interest received account |
|
|
|
15,000 |
|
(Being- interest received on investment) |
|
|
|
|
9 |
Commission receivable account |
Dr |
|
2,000 |
|
September |
To Commission received account |
|
|
|
|
|
(Being- commission receivable) |
|
|
|
2,000 |
12 |
Bank account |
Dr |
|
3,000 |
|
September |
To Dividend received account |
|
|
|
3,000 |
|
(Being- dividend received on investment in shares) |
|
|
|
|
15 |
Cash account |
Dr |
|
12,000 |
|
September |
To Rent received account |
|
|
|
12,000 |
|
(Being- rent received on sub-let) |
|
|
|
|
18 |
Accrued commission account |
Dr |
|
5,000 |
|
September |
To Commission received account |
|
|
|
5,000 |
|
(Being- commission earned but not received) |
|
|
|
|
|
|
|
|
|
|
###########
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
Basic Problem: 14 SUNDRY INCOMES
BRB Agency has following transactions:
4 Oct: Discount received in cash Rs 12,000.
8 Oct: Interest received on investment Rs 15,000 by cheque.
12 Oct: Commission receivable Rs 3,000.
16 Oct: Dividend received on shares investment Rs 4,500 by cheque.
20 Oct: Rent received on sub-let Rs 18,000
Required: Journal entries
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