903 Cash Discounts Earned
Additions/Deductions
Addition to Income
Synopsis
Account 903 is established to record the reduction in price as a result of timely payment to Trade Creditors.
Debits |
Credits |
|
|
Example 1
Record the net payment of a vendor’s statement in the amount of $15,475. The cash discount earned is $310, which allows a 2% cash discount, if paid within 10 days.
Journal: Cash Disbursements
Entry: |
|
Debit |
Credit |
Account 300 |
Accounts Payable – Trade Creditors |
$15,475 |
|
Account 202 |
Cash in Bank |
|
$15,165 |
Account 903 |
Cash Discounts Earned |
|
$310 |