Discount Allowed Account
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Hi
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
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
0
Comments
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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 forumsMatthew Dearlove MAAT
Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.1
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