DBD: Commission Journal Entries (Chargebacks & Write-offs)
At each month-end, you will need to use the Commissions Payable Report to gather the necessary details for your payroll journal entries. This article guides you through identifying the correct data and entering the manual journal entries required for commission chargebacks and write-offs.
Understanding the Report Columns
When you generate the Commissions Payable Report, focus on the following key columns:
- Third-to-Last Column: Displays the total commissions associated with invoices that were successfully collected during the period.
- Far-Right Column: Represents the net total commissions you will actually be paying (or applying as a draw credit).
⚠️ Note: The final payout total is adjusted by two types of entries that are handled differently in your accounting: Chargebacks and Write-offs.
Standard Commission Accounting Flow
Automated Accounting Lifecycle
Before making manual adjustments, it helps to review how the system automatically tracks standard, unadjusted commissions during a normal billing cycle:
| Step | Action | Debit Account | Credit Account |
|---|---|---|---|
| 1. Time of Billing | System Automation | Commission Expense | Accrued Commissions |
| 2. Cash Receipt | System Automation | Accrued Commissions | Commission Payable |
Handling Chargebacks
During the month, chargebacks may be entered into the system. The system does not automatically create a journal entry to credit commission expense and debit commission payable for these. You must enter this manually at month-end.
Get the Chargeback Total
- Go to the Commissions Payable Report settings.
- Check the box for Chargebacks only.
- Run the report to get your total chargeback amount (represented as column [A] on your reference sheet).
Post the Journal Entry
Create a manual journal entry using the total from your report.
General Ledger → Journal Posting → General Journal Entry
- Debit: Commission Payable
- Credit: Commission Expense
Handling Write-offs
When an invoice is formally written off as bad debt, any associated pending commissions must be manually adjusted out of your accounts.
Get the Write-off Total
- Run your Commissions Payable report.
- Isolate the adjustments column matching your reference sheet to identify commissions tied to written-off balances.
Post the Journal Entry
Create a manual journal entry to clear the liability
General Ledger → Journal Posting → General Journal Entry
- Debit: Commission Payable
- Credit: Commission Expense (or designated Commission Reversal account)