What is Purchase Allowance - Definition - Meaning - Explanation
Purchase Allowance Contra Expense Accounting | Purchases Allowances Journal Entry Purchase Allowance is the reduction of Purchase Price given by Seller (Supplier) to Buyer ( Accounts Payable ) when the purchaser agrees to retain the goods that have some minor defects or having below Standard quality. The buyer needs that goods so much and accept the offer of the seller at a lower standard price. It is also k nown as Purchase Allowance Contra Expense Account as it is deducted from Total Purchases on Income Statement or Profit And Loss Account at the end of accounting period. You Can Also Read Out, “ What Are Sales Allowances ” Purchase Allowance has no balance so it is closed by transferring it to the Income Statement / Statement or Comprehensive Income at the end of an Accounting Period. However, Rules of Debit And Credit For Expenses is also the same and applicable for Purchase Allowance i.e., when it increases we debit it and when it decreases, ...