How to Prepare Pharoah Corporation's Journal Entry When Cash is Received?
What is the journal entry needed for Pharoah Corporation when cash is received from Gooch Company?
To prepare Pharoah Corporation's journal entry when cash is received from Gooch Company, we need to record the revenue earned and the commission received. Here's the step-by-step explanation:
Step-by-Step Explanation:
1. Record the cash received from Gooch Company:- Debit: Cash - $21,200
- Credit: Accounts Receivable - $21,200
- Debit: Accounts Receivable - $21,200
- Credit: Sales Revenue - $21,200
- Debit: Sales Commission Expense - $1,908 (9% of $21,200)
- Credit: Sales Commission Payable - $1,908
- Debit: Local Advertising Expense - $540
- Credit: Accounts Payable - $540