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journal entry of cash discount when vat is applicable

Ali Ahmed Khan (CA Student) (245 Points)

03 August 2016

whether cash discount as shown on invoice after charging vat will be admissible in journal entry or it is to be ignored, also if admissible than how cash discount shall be treated in accounting entry.

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5 Replies

Jagdish (CA CS activities) (215 Points)
Replied 04 August 2016

good question

CA Anand V Kabra (Author Teacher Mentor) (584 Points)
Replied 07 August 2016

If discount is affecting the VAT amount then cash discount shall be considered in accounting entry, else you can simply ignore it!

Ali Ahmed Khan (CA Student) (245 Points)
Replied 07 August 2016

thank you Anand v kabra

Bhupinder (Accoutant) (29 Points)
Replied 25 August 2016

Thanks sir

Baljeet Singh (CA, B.Com (H)) (954 Points)
Replied 28 October 2016

If a Tax Invoice is raised, and we are receiving payment agaisnt it. If we do no consider the cash discount entry in our books the amount of Cash DIscount offered will still be standing to the Buyers' Debit.

Thus the closing entry would be:

Cash A/c ...dr

Discount (Cash)...dr

To Party A/c

To VAT Payable A/c

Fellow members please share your views.