To record a payment from the buyer to the seller that involves a cash discount, debit the cash account for the amount paid, debit a sales discounts expense account for the amount of the discount, and credit the account receivable account for the full amount of the invoice being paid.
Cash discount definition - AccountingTools
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Hence, the Purchase amount is shown net of trade discount in the books. A cash discount is received as an incentive for early payment. It is shown as an income in the Profit and loss account. ... Hence, it is credited while making accounting entries in the books.
Discount Allowed and Discount Received - Journal Entries with ...
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The amount of the cash discount is usually a percentage of the total amount of the invoice, but it is sometimes stated as a fixed amount. A typical format in which the terms of a cash discount could be recorded on an invoice is Percentage discount [if paid within xx days] / Net [normal number of payment days].
Cash Discount Definition - Investopedia
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