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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Trade discounts allowed
Hello.
is the following entry correct in this case?
“Trade discounts allowed should be deducted from the gross sales price, so that sales for the
period will be reported in the trading account at their invoice value.
For example, Company B sells inventory on credit to Customer A at a gross sale price of $100 and
offers a trade discount of 10% to the customer. The double entry for the sale is as follows:
DEBIT Income $90
CREDIT Trade receivables $90”
? think the entry should be as follows:
DEBIT Trade receivables $90
CREDIT Income $90
Thanx in advance!
I don’t know where you got this from, however your entry is the correct entry in B’s books (Dr Receivables Cr Sales)