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Discount Allowed Account


I’m struggling to fully understand the workings of a Discounts Allowed Account.

I have Discounts Allowed Daybook on the Dr side, but what goes on the Cr side? What do I balance it off against?

Many thanks


  • CheesypeesyCheesypeesy MAAT Posts: 102
    edited April 2018
    The credit side would be the Sales Ledger Control Account (AKA Trade Receivables). The discount allowed will be posted to the Discounts Allowed account rather than the Bank. The discount allowed is an expense to the business so is a debit.

    For example, if the amount owed was £100 and a 10% discount was allowed:

    DR: £90 Bank
    DR: £10 Discount Allowed
    CR: £100 Sales Ledger Control Account

    Hope that makes sense. Welcome to the AAT forums =)
    Matthew Dearlove MAAT
    Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.
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