Discount accounting
This query is : Resolved
18 January 2010
While purchasing goods sometimes supplier give Cash discount whether fixed or on a certain percentage basis
My query is what is proper treatment
E.g. Purchase - Rs 100/-
Discount - Rs 10/-
Net Payment-Rs 90/-
Option 1) Debiting purchase by Rs100/- & open a separate a/c "Discount" & crediting Rs10/-
Option2) Debiting purchase by Rs90/- ?
Is the treament changes if discount received is
1) recurring/regular basis
2) non-recurring?
Thanks
My query is what is proper treatment
E.g. Purchase - Rs 100/-
Discount - Rs 10/-
Net Payment-Rs 90/-
Option 1) Debiting purchase by Rs100/- & open a separate a/c "Discount" & crediting Rs10/-
Option2) Debiting purchase by Rs90/- ?
Is the treament changes if discount received is
1) recurring/regular basis
2) non-recurring?
Thanks
18 January 2010
If it is a trading discount, entry will be
Pur Dr 90
to Bank Cr 90
If other discount
The entry mentioned by you
Pur Dr 90
to Bank Cr 90
If other discount
The entry mentioned by you
18 January 2010
ACCOUNTING PRINCIPLE REGARDING CASH DISCOUNT :
Always treat it separately.
ANALYSIS OF CASH DISCOUNT :
It shows the cash richness of the firm when shown separately.
Always treat it separately.
ANALYSIS OF CASH DISCOUNT :
It shows the cash richness of the firm when shown separately.
CMA Ramesh Krishnan
(Expert)
18 January 2010
Agree
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