Doubt about discount received

if we received discount (not trade discount) what will be entry for the same.

1) Party a/c debit           Rs.XXX

          To Discount Received a/c          Rs.XXX

(Being discount recd against bill.no. abc123)

OR

2) Party a/c debit          Rs.XXX

       To Purchase a/c                           Rs.XXX

(Being discount recd against bill no. abc123)

ABOVE WHICH ENTRY IS CORRECT PLEASE EXPLAIN

MOST URGENT

 

Note:1)ignore vat

          2) Discount received under Indirect income (profit & Loss a/c)

           3) Purchase under Trading a/c

          4) Party Sundry creditor.

 

1) Both entries may be considered.

2) First entry is observed, where it is essential to understand how much amount is accounted under the head 'Discount Received'

3) On finalisation the very amount will get set off against the Purchases, to understand the Net Value of Purchases.

4) Point 3 above is carried on in your Second Entry.