How to book discount given?

For booking th e discount amount first you ahve to arrive at the sale amount.  suppose the sale amount is say6000 & you have offered it at a discount price of 5500 to teh customer then in such case the discount comes to 500.  So you post the below entry:

Cust  Dr    5500

Dist Dr        500

To-  Sales              6000

In your case you are saying that you ahve purchased the  software for 500 & selling to customer for 2500. I dont know how can you offer so much low procie to teh customer vis-a-vis teh pruchase price.  You ahve only said that the sale is ade for 2500, there are no details given.  you will have to psot a direct entry by debiting customer & crediting sales with 2500.

Originally posted by : Giridhar S Karandikar
	For booking th e discount amount first you ahve to arrive at the sale amount.  suppose the sale amount is say6000 & you have offered it at a discount price of 5500 to teh customer then in such case the discount comes to 500.  So you post the below entry: Cust  Dr    5500 Dist Dr        500 To-  Sales              6000 In your case you are saying that you ahve purchased the  software for 500 & selling to customer for 2500. I dont know how can you offer so much low procie to teh customer vis-a-vis teh pruchase price.  You ahve only said that the sale is ade for 2500, there are no details given.  you will have to psot a direct entry by debiting customer & crediting sales with 2500.

What should I called this discount? Is it Cash discount or Discount given? Currency we are using it as cash discount ledger. We are offering these discount for sales promotion or sometimes to our precious customers. While it is sales promotion I am using ldger as Sales promotion expenses and while I give it to customer I treat it as Cash discount. Am I right?

Originally posted by : Giridhar S Karandikar
	For booking th e discount amount first you ahve to arrive at the sale amount.  suppose the sale amount is say6000 & you have offered it at a discount price of 5500 to teh customer then in such case the discount comes to 500.  So you post the below entry: Cust  Dr    5500 Dist Dr        500 To-  Sales              6000 In your case you are saying that you ahve purchased the  software for 500 & selling to customer for 2500. I dont know how can you offer so much low procie to teh customer vis-a-vis teh pruchase price.  You ahve only said that the sale is ade for 2500, there are no details given.  you will have to psot a direct entry by debiting customer & crediting sales with 2500.

What should I call this discount? Is it Cash discount or Discount given? Currency we are using it as cash discount ledger. We are offering this discount for sales promotion or sometimes to our precious customers. While it is sales promotion I am using ledger as Sales promotion expenses and while I give it to customer I treat it as Cash discount. Am I right?

It doesn't make any difference if u are offering ur products to ur customers at a discounted price...unlike the discount offers u can treat it as sales promotio expenses provided u should have to make the entry for the same....else just pass the entry of  cash discount ...simply ...

Else go for the promotion expenses making the another specific entry ..will not make any difference ,,,,,but keep one thing in ur minf that u must to consider ur business policy before...

else post the question elaborating some other aspects also,....

Regards,

Ankit 

Dear All,

The entry will flow as follows:-

As per the above query purchase price was Rs.5000 and sales price is Rs.2500 + VAT (assumed)

So, Your cost of the product is say Rs.5000 and you need to give discount of 50% as trade discount (this can be defined in your software itself)

Customer A/c             Dr    Rs.2850/-

VAT A/c @ 14%         Cr    Rs. 350/-

Sales A/c                  Cr      Rs.2500/-

OR else

Sales A/c                          Cr 5000/-

Tade discount  50%       Dr 2500/-

VAT (after discount)14%  Cr   350/-

Customer A/c                  Dr 2850/-