Bookkeeping for commissions consists in its simplest form in merely recording, through the cash book, the commissions as collected. It is the custom, however, for brokers engaged in this class of business to attend to other matters, such as procuring abstracts of title, payment of taxes, etc., which involve the payment of money for purchasers. In such cases, a detailed account of all transactions should appear on the books. Many items, such as arrears of taxes, are easily overlooked, and the proper protection of client and broker calls for a full record.

Let us assume that the concern arranges a loan of $5,000 from John Doe to Richard Roe, paying $42 for an abstract, $50 for attorney's fees, $2.50 for recording fees, $80 for taxes, $10 for appraiser's fee, and that it charges $5 for drawing the papers and $100 as commission or brokerage.

The expenditures and charges made by the concern will be entered on the cash book to "Doe-Roe Loan," and if the amount of business warrants it, special columns will be reserved on each side of the cash book for loans and sales. John Doe pays the $5,000 to the concern. A small sub-ledger (Form 13, Section 22) is opened for these brokerage transactions, the record of both kinds being kept in one book under separate indexes if desired.

On the general ledger all the above-mentioned items will be charged and credited to Loans account, either by individual items or, in the case of a columnar cash book, by monthly totals. The sub-ledger account will read as follows:

Doe-Roe Loan

Abstract..........

CB

$42.00

John Doe.........

$5,000.00

Attorney..........

CB

50.00

Recording.......

CB

2.50

Taxes............

CB

80.00

Appraiser.......

CB

10.00

Drawing Papers......

J

5.00

Brokerage.......

J

100.00

Paid R Roe.......

CB

4,710.50

$5,000.00

$5,000.00

The charges for drawing papers and for brokerage are posted to the general ledger from the following journal entry:

Loans

$105

To Loan Brokerage

$105

Fees in Doe-Roe loan; commission, $100; drawing papers, $5.

Such an account shows at once the payment of all deductions for which the concern is accountable, and the state of any transaction may be seen at any time. It also shows clearly the profit from this particular class of business. If Richard Roe has sold the property to John Doe, the same entries might equally well appear, except that the brokerage journal entry would read as follows:

Sales .................................

$......

To Sale Brokerage .............................

$......

Brokerage in Roe-Doe sale.