Trade Discount

i donno this exactly

bt it may be becoz of uncertainty of amount of discount offered to the different parties.

i.e. there's certainty in case of cash discount that a certain %tage will b allowed if the payment is made within time

 i don think dat is d reason coz dere may be certain fixed pc of disc if a particular qty is purchased..but i want to no vere is it written dat trade disc shd not b recorded seperately..

If u are going to settel the account of third party by way to clear the amount in cash, Bank, sales to a person and receiving like a discount only.

In order to close the account by giving a entry, for example to close the account of X assume you having the balance Rs. 10000/- but you paid Rs.9500/- the balance of Rs.500 is u treated as discount.

 So the entry should be have discount account this is not a presentation purpose. in this case with out discount account you should not able to close the account, still showing the balance for list.

suresh, but what abt dis if provided on cash sales?whether to record cash sales net of dis or not?

Hi Abhishek,

Sales are recorded net of trade discounts as the same appears on the sale bill and it is sure that such discount has been given. If companies were allowed to record sale at the gross value without trade discounts, this would lead to a lot of window dressing for the purpose of increasing the turnover of the company and debiting the discount amount to P&L account.

Also statutory dues like VAT, excise, etc. are calculated on the net amount after trade discounts.

Hope this would help.