Discount

[Former Member]

hi all,

In which account the discount money goes?/

suppose we have given discount of 10 % on A/R invoice Amount (100).in which account the discount money goes??

Thanks,

Neetu

[Former Member · Accepted solution]

Hi

Create separate GL account for discount payable in expenditure and discount receivable in revenue.

Go to GL account determination you have to set discount discount payable in sales tab and discount receivable in purchase tab.

regards

[Former Member · Accepted solution]

Hi Netu,

It is correctly suggested in the previous reply. There has been a mistake to mention that you mention accounts for discount alowed and discount recieved and not " discount payable".

Regards,

Raj

[Former Member · Accepted solution]

I mapped both the accounts but when ever doing any sales and purchase activity there is no credit debit in the accounts?

Why??

thanks,

Neetu

[Former Member · Accepted solution]

Hi Netu,

The discount mentioned in the document (A/R Invoice or the AP Invoice) will not effect the ledgers. The fact holds the logic that, lets take it for a customer, you are allowing the discount on the price. This means you are reducing the liability from your margin or cost. So the system creates a liability of the discounted price.

But when you are recieving the incoming payment and then you allot a discount on the created liability this is treated as your expense and will be posted to the discount allowed account.

For ex. the inv value is 100 (liability. During the payment posting you give a discount of 10%, termed as cash discount. Then the Rs.10 will be posted in the discount allowed account.

I hope you understood the fact. When you allow a discount in document it as good as a new price you are alloting to the customer and that should not effect the ledgers as the benifit has not been incurred from your ledgers or cash (whatever you say), to the customer.

The same stands true in purchase.

Regards,

Raj