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Hi MikeLittle. I would like to ask a question. Could you please help to explain this question? I can’t figure out this question…
(iii) Pricewell’s revenue includes $8 million for goods it sold acting as an agent for Trilby. Pricewell earned a commission of 20% on these sales and remitted the difference of $6·4 million (included in cost of sales) to Trilby.
Thank you.
sales on commission
Dr. revenue 6,400
Cr. cos 6,400this leaves with a commission 20%*8000 =1600
Turay, the question is addressed to “the tutor” – there’s a clue in the title to the page ….. “Ask the tutor”
Now, at the last date that I enquired, I was that tutor and not you! I appreciate your involvement on the site but would ask that you kindly kept your helpful comments to the general forum 🙂
Wendy, in answer to your question, here is a previous response to the same question:-
“The goods are not “yours” so you do not record the sale price as your revenue nor include the cost as part of cost of sales.
Instead, record the amount of the commission received as “sundry income” or “other income” or even “commission income”
Hope that helps
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