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journal entry of cash discount when vat is applicable
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.
Replies (5)
good question
If discount is affecting the VAT amount then cash discount shall be considered in accounting entry, else you can simply ignore it!
thank you Anand v kabra
Thanks sir
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.
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