Dear Readers in this blog you get information about Journal Entry for Discount Received. It is a beneficial gain for a business. It occurs when we settle our obligations with creditors ahead of their due dates.

This not only adds to our earnings but also accelerates the settlement of our liabilities. To document the receipt of a discount, we use the following journal entry:

Let’s illustrate this with an example:

Suppose John, on March 10, 2023, purchased goods from XYZ Suppliers on credit for a total of Rs. 75,000. As per their agreement, if John pays within 15 days of the purchase, he’s eligible for a 5% discount. John decides to make the payment on March 20, 2023. Here’s how we record the discount received in John’s Day book:

Day Book of John:

March 10, 2023:

 

 Purchase Account Debit: Rs. 75,000

 XYZ Suppliers Account Credit: Rs. 75,000

March 20, 2023:

XYZ Suppliers Account Debit: Rs. 75,000

 Bank Account Credit: Rs. 71,250

 Discount Received Account Credit: Rs. 3,750

In this journal entry:

On March 10, 2023, when the purchase was made, the purchase account is debited to acknowledge the liability, and XYZ Suppliers’ account is credited accordingly.

On March 20, 2023, when John pays and receives a discount, XYZ Suppliers’ account is debited to reduce the liability, the bank account is credited to record the cash payment, and the discount received account is credited to acknowledge the discount earned.

RELATED ARTICLE

JOURNAL ENTRIES WITH EXAMPLES

JOURNAL ENTRY FOR DISCOUNT RECEIVED CONCLUSION

Dear readers by reading above article you got the information related to Journal Entry for Discount Received. If you have any questions kindly comment below.