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settlement discount

jkcjkc Well-KnownRegistered Posts: 166
hi
can any one help with settlement discounts, if the goods have been returned and a credit note received. I did the simulation today for purchases side and
have probably failed help!

Comments

  • thoms04thoms04 Feels At Home Registered Posts: 36
    Hi there, i have recently completed certificate stage so i still have most of it fresh in my mind. Which parts of it are you stuck on?
  • jkcjkc Well-Known Registered Posts: 166
    Reducing cash settlement by amount of goods sent back. The settlement discount taken is the same as the amount on the invoice. and does not seem to have taken in to account the credit note which says reduce the settlement by an certain amount. There are two invoices and one credit note. also the credit note and invoice seem to wipe each other out any way i think they are the same amount. The question is are they refering to each other?
    There is also a little excersise where you pay a bill in cash then have to write a check to cover this to pay in the bank. any help would be appreciated thanks!
  • marknotgeorgemarknotgeorge Well-Known Registered Posts: 158
    Are you referring to the settlement figure on the note left by your 'boss' on the supplier's statement. My advice would be t otake that as correct. on every practice skills test I did for unit 2 (I'm at the same level as you), I adjusted the settlement discount figure given, and lost marks because of it.
  • Spring FlowerSpring Flower New Member Registered Posts: 14
    Hi,

    The treatment for settlement discount is,

    Creditors a/c dr
    To Purchase Rtn a/c cr
    To Discount allowed a/c cr
  • jkcjkc Well-Known Registered Posts: 166
    Thanks! I was thinking about taking the bosses word for it. and this is what
    I should do, if its wrong its wrong.
    can any one help with how to anyalise a cash payment to a non trade debtor, then pay a cheque in to the bank to cover the payment. i think I should credit the bank with a cash purchase debit, the vat and debit purchases. but i dont know what to do with paying the check back to the bank. thanks
  • CJCCJC Font Of All Knowledge Registered Posts: 1,657
    It depends on how you have your debtors' accounts set up... but you just need to credit bank and debit the creditors a/c wherever that is held - if it's in the purchase ledger you will also need to credit the PL control account. Entries for VAT and the purchase (or expense) should have been already posted from the purchases day-book.

    Not quite sure what you mean by 'paying a cheque in to cover the payment'. Where is that money coming from?
  • jkcjkc Well-Known Registered Posts: 166
    hi
    Thanks for your interest help is greatly apreciated
    Its a cash purchase from some one who does not have an account with the business. I have to go to the bank and take out money in the highest denominations (done) you then make cheque to take to the bank. I dont understand the question i guess. it could be that i have to take a check to the bank to with draw the cash. how do i deal with this?

    with the other question can i debit purchase ledger control with a cash payment from a supplier that does not have an account with the business.
  • CJCCJC Font Of All Knowledge Registered Posts: 1,657
    If it's a cash purchase, then you're way of dealing with it is just right. If you're cashing a cheque it will depend on whether you keep separate records of actual physical cash and what's in the bank. If you don't then there's no real need to record it in the accounts. If you do, then just credit the bank a/c and debit cash a/c ... or you may have an analysed cash book that has columns for 'cash' and 'bank' and again just credit bank and debit cash.

    From an accounting point of view nothing really happens when you cash a cheque but the accounts may still be set up to record such a transaction.

    If a credit supplier doesn't have an account in the purchase ledger then you wouldn't post in the PLCA - the PCLA is a summary of accounts in the PL. You'd probably use a 'Sundry Creditors' a/c (or some such)
  • jkcjkc Well-Known Registered Posts: 166
    thanks to every one, i am really greatful and feel loads better
  • ItalianShortfuseItalianShortfuse Just Joined Registered Posts: 4
    :
    CJC wrote: »
    It depends on how you have your debtors' accounts set up... but you just need to credit bank and debit the creditors a/c wherever that is held - if it's in the purchase ledger you will also need to credit the PL control account. Entries for VAT and the purchase (or expense) should have been already posted from the purchases day-book.

    Not quite sure what you mean by 'paying a cheque in to cover the payment'. Where is that money coming from?

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