Journal Entry for Discount Allowed and Received Last Updated : 21 Apr, 2025 Comments Improve Suggest changes Like Article Like Report A discount is a concession in the selling price of a product offered by a seller to its customers. According to nature, there are two types of discount:A. Discount AllowedB. Discount ReceivedA. Discount Allowed: When at the time of sales or receiving cash, any concession is given to the customers, it is called discount allowed. Journal Entry: Example: Goods sold ₹50,000 for cash, discount allowed @ 10%.Cash received from Rishabh worth ₹19,500 and discount allowed to him ₹500.Solution: B. Discount Received: When at the time of purchase or paying cash, any concession is received from the seller, it is called discount received.Journal Entry: Example: Goods purchased for cash ₹20,000, discount received @ 20%.Cash paid to Vishal ₹14,750 and discount received from him ₹250.Solution: According to the business point of view, there are two types of Discount:A. Trade DiscountB. Cash DiscountA. Trade Discount: The discount provided by the seller to its customers at a fixed percentage on the listed price, mostly on bulk purchases, is called a trade discount. Trade discount is not shown separately in the journal entry.Journal Entry: Example: Goods purchased from Hardik ₹20,000, at less 10% Trade Discount.Goods sold to Abhinav for ₹10,000 and offered him a Trade Discount of @5%.Solution: Example: If goods purchased or sold at a trade discount are returned: (Based on the above example)Goods purchased from Hardik worth ₹2,000 were returned.Abhinav returned goods worth ₹1,000.Solution: B. Cash Discount: A Cash discount is offered to those types of customers who make quick payments or payment is made by them within a fixed period. Journal Entry: Example: Goods purchased from Sahil ₹10,000 for cash, at less 10% Trade Discount and 5% cash discount.Goods sold to Kashish for ₹20,000 for cash and offered him a Trade Discount @5% and a cash discount @2.5%.Solution: Notes to Accounts:Working Note 1: Working Note 2: Comment More infoAdvertise with us S sukantkumar Follow Improve Article Tags : Accountancy Commerce Similar Reads Journal Entry (Capital, Drawings, Expenses, Income & Goods) 1. Capital Account: The amount invested in the business whether in the means of cash or kind by the proprietor or owner of the business is called capital. The capital account will be credited and the cash or assets brought in will be debited. Journal Entry:  Example: Sahil started his business with 3 min read Journal Entry for Capital The amount invested in the business whether in the means of cash or kind by the proprietor or owner of the business is called capital. The capital account will be credited and the cash or assets brought in will be debited. Journal Entry:  Example 1: Sahil started his business with cash, furniture, a 1 min read Journal Entry for Drawings Withdrawal of any amount in cash or kind from the enterprise for personal use by the proprietor is termed as Drawings. The Drawings account will be debited, and the cash or goods withdrawn will be debited.Journal Entry:  Example 1: Cash and Goods are withdrawn from the office for personal use ₹500 a 1 min read Journal Entry for Paid Expenses Any amount spent in order to purchase or sell goods or services that generates revenue in the business is called expenses. Rent, Commission paid, Salaries & Wages Paid, Interest paid, etc are some examples of Expenses. Expenses are a part of the Nominal account. The Cash Account will be decrease 1 min read Journal Entry for Income Any monetary benefit arising from the business can be termed as income. Rent received, Commission received, Dividend earned, Interest received, etc are some examples of income. Income is treated as a Nominal account. Cash Account will be increased with the amount received as income, so it will be De 1 min read Journal Entry for Sales and Purchase of Goods Goods are those items in which a business deals. In other words, goods are the commodities that are purchased and sold in a business on a daily basis. Goods are denoted as 'Purchases A/c' when goods are purchased and 'Sales A/c' when they are sold. Goods Account is classified into five different acc 2 min read Journal Entry for Cash and Credit Transactions Transactions related to the purchase and sale of goods can be of two types, Cash or Credit. A. Cash Transactions: Cash transactions are those transactions in which payment is made or received in cash at the time of purchase or sale of goods. Cash transactions can be identified by:When the Name of th 1 min read Journal Entries | Banking Transactions (Part-1) Recording of Banking Transactions:All businesses make many transactions with the bank in their day-to-day activities. Journal Entries related to banking transactions are as follows:1. When cash is deposited in the bank:Journal Entry:  Example: Cash is deposited in the bank ₹10,000.Solution: 2. When 2 min read Journal Entries | Banking Transactions (Part-2) 1. Payment is received through cheque, and a discount is allowed.A. When a cheque is received from a customer, and a discount is allowed to him (Cheque is deposited into the bank on the same day):Journal Entry:  Example: Received a cheque of ₹19,400 from Vishal and deposited it in the bank, and offe 1 min read Journal Entry for Sale and Purchase of Assets Assets (Machinery, Building, Land, etc.) can also be purchased or sold in cash or on credit. Assets purchased are not represented through Purchases but with the name of the Asset.Journal Entry: (When Assets are Purchased) Example: Machinery purchased for cash ₹50,000.Machinery purchased from Vishal 1 min read Like