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can you help me with answering this task?
invoices for 5000 raised to customer by Y Ltd.5% discount if customer pays within 14days.Y Ltd expects invoices for 2000 to be paid with discount.customer paid 2850 with face value 3000 and advantage of 150 as a discount.
the answer is:
Dr receiv.4900 Cr Sales 4900
Dr Cash 2850 Cr receiv 3000
Dr sales 150
why is 4900? it shoudlnt be 5000 when the full discount is entered in Sales 150 or RLCA should be 4900 but Sales discount should be only 50
As I explain in my free lectures on IFRS 15, the invoices should be recorded net of any discount that they are expecting the customer to take.
Here, they invoice 5,000 and are expected the customer to take a discount of 5% x 2,000 = $100.
Therefore they expect to receive $4,900 and so they will Dr Receivables 4,900 and Cr Sales $4,900.
As far as the second entry is concerned, then assuming you have typed out the whole question correctly, then the question is worded very badly. The answer has assumed that the invoice of $3,000 that is being paid was the other $3,000 (5,000 – 2,000) that they were not expecting the discount to be taken on. When a discount is taken that was not expected to be taken (here $150), then the entry is as stated in your answer – the $150 is taken from sales.