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View Full Version : When to record a promotional discount


Cynthialee45
May 27, 2007, 05:38 PM
If a company offers a 10% promotional discount, is this taken off the price of the goods before they are billed? Or would the invoice be at full price, with the deduction taken at the time of payment?
Also, if the invoice is paid within 2%10 net 30 terms, could the 2%discount also be taken?
I am doing a practice set and my A/R does not foot out to the subsidiary ledgers. This is the only one I think I may have done wrong.
Any help is genuinely appreciated.:)

pree007
May 27, 2007, 11:31 PM
Generally trade discounts are deducted before recording the transactions as they depends on the buyers bargaining skills.for the present issue we need to consider is it a trade discount or cash discount which can be judged by looking at the timing of the discount .
Discount received at the time of purchase or before making payments are generally known as trade discount and hence ignored.

Cynthialee45
May 28, 2007, 02:01 AM
Thank you.
I found my problem to not be related to this transaction at all. They have to do with a sales return and a write off not correctly entered in the subsidiary. (I seem to have a hard time getting my head around these.) I have corrected the sales return, but still struggling with the write off. Thanks for your help!