Discounts for Early Payment
We can receive a discount for early payment from the company that is selling us merchandise. This is called a purchase discount. We can also offer our customers a discount if they pay us quickly. That is called a sales discount.
If we make purchases totaling $10,000, the entry to record the purchases would be (omitting explanations):
Perpetual system:
Periodic system:
If the seller offers a 2 percent discount, and the date of our payment allows us to take the discount, the entry would be:
Perpetual system:
Periodic ...
Get Accounting Demystified now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
