Recording cash discount

In my country it is very common that the seller gives me random amount discount and not on percentage.

For example, if my total bill is 30,015 they will only want 30,000.

So, how should I record it when I purchase merchandise?

If entering a purchase invoice for later payment, enter the amount you must pay, no matter how that figure was derived or presented by the supplier. If making a cash payment, enter the amount you actually pay.

In either case, the amount you pay is the price, not some other number with discounts that were given to make you feel like a valued customer or for convenience in making change.

@Tut What if the invoice is something like this:

Item 1 2qty 10,000.00 20,000.00
Item 2 1qty 10,015.00 10,015.00
Total 30,015.00
Discount 15.00
Payment 30,000.00

You have two choices:

  1. Apportion the discount in some reasonable fashion. You could allocate 5 to each unit of Item 1 and 5 to Item 2. You could allocate all 15 to Item 2. Or you could be fancy and allocate 15 x 10,000/30,015 to each of Item 1 and 15 x 10,015/30,015 to Item 2. In this case, the difference would be in the third decimal place and probably not matter. That decision would depend on what you were buying and how accurately you felt you needed to record prices. If you are buying general supplies, it would not matter at all. If you are buying inventory items and want your average cost calculations to be accurate, it might.

  2. Record the purchase price of the two line items as given and enter a third line posted to a Discounts received income account as -15. (Note the negative number.) You might choose this option if you want average inventory cost to be very accurate and might receive different discounts or no discounts in the future.

@Tut thank you… that seems to work just fine. :smile: