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Reply from VidhyaDhar on Mar 1 at 10:00 PM Hi,
The scenario is " using a net document type " and your vendor allows a
cash discount of 5 USD if you pay early.
Event 01 : Purchase of material *using a Net document type* *such as KN
or AN* "
Purchase Account Debit 95
Cash Discount Clearing Account Debit 5
Vendor Account Credit 100
*If you make early payment *
**
Vendor Account Debit 100
Bank Account
Credit 95
Cash Discount Clearing Account Credit 5
*Here, your purchase is accounted at a net value of 95 USD and cash paid
by you ( early payment ) is also for 95 USD whereas the vendor invoice is
for 100 USD ; the discount element is adjusted net in the purchase value .*
*If you are unable to make early payment ( viz. paying on the due date ) *
**
**
Vendor Account Debit 100
Bank Account
Credit 100
*Cash Discount Lost Account ( a lost benefit ) Debit 5 *
*Cash Discount Clearing Account
Credit 5*
**
*Since you are paying on the due date ( without availing the cash discount
benefit ), your outflow of money is 100 USD and the provisional value of 5
USD in the clearing account transforms itself into cash discount lost
account.*
**
Regards,
VidhyaDhar
| | | ---------------Original Message---------------
From: Bose
Sent: Thursday, March 01, 2012 10:41 AM
Subject: OBXV :Cash Discount lost
Hi Vidhya Dhar,
Thank you so much for your detaild explanation, after reading your reply i understand the concept of Lost Cash discount.
if you dont mind will you please update the entries here, i feel that would be more clear for the learners like me.
Thanks for your valuable support and encouragement. |
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