500 Purchase Discount Journal Entry Explained
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Purchase discount, the discount we receive when we purchase inventory, purchase discount not to be confused with the sales discount. A purchase discount will include discount terms, the vendor providing a discount to us if payment is received in a certain time period. First journal entry of a purchase discount transaction is no different than a purchase which has no discount, difference being in the second journal entry in a purchase discount transaction because we will need to calculate the amount of the discount, the amount of cash, and then record the journal entry crediting cash, debiting AP, and debiting inventory, the debit of inventory being the confusing part for most because we will credit inventory for the amount of the discount and will need to resist the eager to debit sales discount because sales discount relates to a discount we give to the customer, not a discount we are receiving from the vendor which is what a purchase discount is. With a purchase discount, we need to reduce the value of the inventory because we overstated the inventory with the original transaction by including the amount of the discount.
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Purchase discount, the discount we receive when we purchase inventory, purchase discount not to be confused with the sales discount. A purchase discount will include discount terms, the vendor providing a discount to us if payment is received in a certain time period. First journal entry of a purchase discount transaction is no different than a purchase which has no discount, difference being in the second journal entry in a purchase discount transaction because we will need to calculate the amount of the discount, the amount of cash, and then record the journal entry crediting cash, debiting AP, and debiting inventory, the debit of inventory being the confusing part for most because we will credit inventory for the amount of the discount and will need to resist the eager to debit sales discount because sales discount relates to a discount we give to the customer, not a discount we are receiving from the vendor which is what a purchase discount is. With a purchase discount, we need to reduce the value of the inventory because we overstated the inventory with the original transaction by including the amount of the discount.
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Why Learn Accounting - Accounting Beg...
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101 Cash vs Accrual - Cash Method / Accrual method differenc
101 Cash vs Accrual - Cash Method / A...
101 Revenue Recognition Principle
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Double Entry Accounting System Explained - Balance Sheet
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101 Income Statement Introduction
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101 Accounting Objectives - Relevance Reliability Comparability
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101 Transaction Rules - Accounting Equation
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101 Transaction Throught Process / Steps - Accounting Equation
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101 Owner Deposits Cash Transaction Accounting Equation
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101 Work Completed for Cash Transaction Accounting Equation
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100.110 Pay Employee with Cash Transaction Accounting Equati
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200 Debits & Credits Normal Balance - Double Entry Accounting Sy
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8 سال پیش
در تاریخ 1395/09/29 منتشر شده
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