Accounts Payable Journal Entry With Discount

 

When we paid to our suppliers or creditors before due date, then they may give us a Discount due to prompt payment which is Discount Received for our business.

Example, suppose we paid cash / check to our suppliers Rs. 9500 in full settlement of Rs. 10000. Then, what is the journal entry to record in the books of accounts?

In this example, we record the following entry:

                               Accounts Payable a/c  10000

 

                                                                  Cash a/c / Bank a/c  9500

                                                                  Discount Received a/c  500

                                              (Paid To Suppliers In Full Settlement)

As we paid to our suppliers of Rs. 9500, so we get discount received of Rs. 500 as a revenue for our business.