Discounts allowed

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:24AM in AAT student discussion
Hi everyone, Help please! I thought I understood discounts allowed but I cannot get my head round how to enter them in the subsidiary sales ledger. Should it be cr amount of cheque received then show discount allowed otherwise debtors account would not reconsile to SLCA because we dr SLCA with discounts allowed :oops:

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Discounts allowed

    Sorry i made an error - i meant we cr SLCA with cash receipt AND disc allowed - am bit stressed :(
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Discounts allowed

    hi

    disc allowed will always be a credit in the subsidiary account, and a dr in the p&l, as an expense.

    this is because the business is offering a discount to their debtors - and this cost has to be borne somewhere. the business bears it.


    Discounts received are the other way around. the plca will be debited with it in your books and will credited to discounts received, extra 'revenue' for want of a better word.

    hope this helps Suzy B

    regards, Ruby
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Discounts allowed

    yes - you would credit slca / debtors with the bank entry and the cr entry in respect to discounts allowed
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Discounts allowed

    don't forget to also post to the subsidary ledger, whichever customer it is, on the same side (CR) as the SLCA!!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Discounts allowed

    Hi Ruby, Thank you so much. It was marked in one of my progress tests as being incorrect when I had got it right all the time. I spent a lot of wasted time on it last night wondering where I had gone wrong but your reply confirms I had it correct in the first place. Bad is'nt it :cry:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Discounts allowed

    Hi. I am doing distance learning Diploma Pathway and have been speaking to my tutor on the telephone in my lunch hour. I have discovered that the discounts allowed error which they made when marking my progress test was only ONE OF 5 ERRORS made by my Distance Learning Centre on that 1 paper. This caused me to get very stressed and frustrated last night as I though I has lost the plot!! I should have been spending my time revising. Has anyone else has similar problems? :shock:

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