How to record a discount received
A supplier may take a little off for paying early. Work out the discount and record it, with its VAT, in the books.
Task 1What a discount received is3 questions
Some suppliers take a little off an invoice if it is paid early. This is a prompt payment discount.
To the buyer it is a discount received. It is income, because the buyer keeps money it would otherwise have paid.
A trade discount is different. It is taken off the price on the invoice itself, so it is never recorded on its own.
Task 2Working out the discount3 questions
Task 3The two entries4 questions