Hello Support,
I want to achieve the following:
When creating purchase invoice - I want to add a discount to each item but it should reflect in a discount head and not in my inventory value.
I want to input the actual inventory cost and then apply the discounts because my inventory value is cost-disc and I have to pay to the company in full amount and I get the discount refund from the supplier at the month end.
Your inventory cost is your purchase cost - this includes the discount unless the discount is discretionary. The fact that the discount is paid in arrears at the month end has nothing to do with the cost of the goods. Supposed you paid your supplier after 90 days, does this mean the cost was zero?
If the “discount” (which sounds more like a rebate) can be associated with specific inventory items, it should be reflected in Inventory on hand. To do this, receive the money with a cash or bank transaction. Enter the inventory item as a line item, but make the quantity zero. Enter the rebate amount as unit price. The rebate will be figured into the average cost of that inventory item without changing quantities.
If the rebate is not identifiable with specific items, it can be accounted for as income. Create an income account named something like Supplier rebates and post the receipt there.
Thanks Tut. It was helpful
Joe, the client is doing the following:
1.Upfront we pay full invoice amount.
2. At the month end we get some discount / rebate paid in cash which will reduce the COGS.