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Discounts Received

Discount received is discount you get from your suppliers at the time of the purchase transaction because of the prompt payment you make for the purchases. The discount is usually a percentage of the invoice value of the goods made on credit, but offered to you if you pay within a specified period which is usually thirty days.

The discount is a percentage of the net purchases. Net purchases are the amount after deduction of purchases returns and allowances. The discount reduces the price of your purchases. As the supplier’s/creditor’s account is a credit account, the discount received has to be a debit entry to reduce the amount owed. The following entries are made when payment is made and discount received.

  1. Debit supplier’s/creditor’s account (with discounted amount)
  2. Credit the cash account

 

Purchases Ledger

S Superman Account

Date Particulars Folio Amount Date Particulars Folio Amount
$ $
May 16 Cash CB32 570 May 1 Balance b/d 600

To balance off this sale transaction in the account,

  1. Debit supplier’s/creditor’s account (with the discount)
  2. Credit the discount received account

 

Purchases Ledger

S Superman Account

Date
Particulars
Folio
Amount

Date
Particulars
Folio
Amount



$




$
May 16
Cash
CB32
570

May 1
Balance b/d

600
"
Discounts Received
GL11
30





600 600


General Ledger

Discounts Received Account

Date Particulars Folio Amount
Date Particulars Folio Amount



$



$



May 16 S Superman PL33
30


Last Updated (Saturday, 11 September 2010 13:03)