- May 20, 2020 at 9:33 pm
Drive gives a cash discount of $40 to a customer.The disc allowed is credited to the disc allowed account.
The effect of recording the discount in this way is that profit will be overstated by $80.
How can we say like this ?
Actually discount allowed is it debit or credit
And also discount received is it debit or credit?
Many thanksMay 21, 2020 at 8:24 am
I think that maybe you are studying from an old book, because the treatment of discounts allowed has changed. Sales are recorded net of any discount allowed and there is no discounts allowed account.
A discount received is income and is credited to the discounts received account.
The treatment of both is explained in full in my free lectures.May 21, 2020 at 10:02 am
A suspense account was opened for this Difference
The total of the cash discount Columns in the cash book had not been posted to the discount accounts. The figures were discount allowed $3900 and discount received $5100.
Sir,in this case in the suspense account how does discount allowed be on the credit side and disc received on the debit side
Many thanksMay 21, 2020 at 12:38 pm
We need to credit discount received account with 5,100 and therefore debit the suspense account with 5,100.
The opposite would have happened with the discount allowed, but as I wrote in my previous reply the treatment of discounts allowed has changed.
I do suggest that you watch my free lectures on suspense accounts.
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