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March 20, 2018 / Uncategorized

Accounting for discounts

The discount is a reduction in the price of goods where goods are usually sold to other suppliers of the carrier. Discounts can be considered as two parts:

1. Trade Discounts – This is a drop in the price of a commodity item that a wholesaler or manufacturer has given to a retailer. Often available for bulk purchase orders.

2nd Cash or settlement discounts – This is a reduction in the amount payable for the purchase of goods or services in exchange for cash rather than credit.

Commercial Discounts

This is a price reduction due to the nature of the transaction's transaction. For example, a buyer could buy a $ 2 per item per item, but at a lower price of $ 0.5 per item when the item was purchased at 200 or more units at a time.

In accounting trading, discounts are fixed only on daily books, not on journals.

Cash or Balance Discount

This is a reduction in the amount payable by the supplier for immediate cash payment instead of buying credits. For example, a mail orderer may charge $ 200 for goods but 10% if the goods are paid in cash immediately.

In accounting trading, rebates are first recorded as a cash register and forwarded to the journal.

Purchased Trade Discounts
This is deducted from the gross cost of purchase. It is recorded as follows:

o Total credit (19459004) o Receipt discounts (loan)
o Account number (credit)

At the end of the reporting period the profit and loss account

o Discounts received )
o Profit and Loss Statement (Credit)

Trade Discounts Allowed
This is deducted from the gross selling price. It is recorded as follows:

o payment account (deposit)
o permissible discounts (deposit)
o total debtor (credit)

At the end of the accounting period the income statement

o Income Statement )
o Received Discounts (Credit)

Source by sbobet

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