October 30, 2016 admin

Cash Discounts Earned

Adjustments to Income

CASH DISCOUNTS EARNED ADDITIONS TO INCOME ACCOUNT
9100

ACCOUNT EXPLANATION
Cash discounts earned by payment of vendors’ invoices within the discount period.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Check issued to vendor in payment of invoice less discount for prompt payment CD
    Accounts Payable—Trade 2100
      Cash in Bank—General 1001
      Cash Discounts Earned 9100
COMMENTS
  • Trade discounts, which are not dependent on prompt payment, should be considered as a reduction of the purchase price.
  • Stock order discounts should be credited to Account 6550, Parts—Discount Earned.