Question

What Should Be The Entry When Goods Are Purchased At A Discount?

Answer 1

Hey mate ..

here's the answer ...

Early payment discount. Some suppliers offer discounts of 1% or 2% from the sales invoice amount, if the invoice is paid in 10 days instead of the usual 30 days. For instance, let's assume that a company purchases goods and the supplier's sales invoice is $28,000 with terms of 1/10, net 30. This means that the company can deduct $280 (1% of $28,000) if it pays the invoice within 10 days. Otherwise, the company must pay $28,000 within 30 days. The early payment discount is also referred to as a purchase discount or cash discount.

Hope it helps ❤

Answer 2

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Purchase Account Dr. to Cash account is the very simplified answer that should be done for the entry when Goods are purchased at a discount.