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kjlomen · Jan 26, 2011, 01:52 PM

I am issuing check for $10,192 for $10,400 invoice with 2% discount which is $208. I am unsure where all to post entries. I post one In Accounts Payable ledger under account I know with the $10,192 and discout for $208, and general ledger under accts payable. Under general ledger accts payable do I just list as debit of $10,400 or put $10,192 then discount amount for $208. And would I place the $208 in general ledger labeled sales discounts. Thank you very much.

pready · Jan 26, 2011, 07:00 PM

You will debit Accounts Payable for the total amount owed, then you will credit cash for the amount paid and credit the difference between the amount owed and the amount paid to sales discounts.

kjlomen · Jan 26, 2011, 08:59 PM

Why I am crediting cash if I am not using cash?

pready · Jan 27, 2011, 12:46 PM

When you issue a check you are making a cash payment from the money in your bank checking account.

Look at it this way: If you write a personal check to make your house payment you are telling who you are making the payment to that you have cash in your checking account at your bank and the amount of money that the check is for is now their money. So if you make a $1,000 payment you are telling the company that you wrote the check to that the $1,000 is being transferred to them when they cash your check. Also when the check is cashed your bank checking account balance will be reduced by the $1,000.