953 Cash Discounts Allowed

Additions/Deductions

Deductions from Income

Synopsis

Account 953 is established to record Cash Discounts granted to customers as an incentive to pay promptly.

Debits

Credits

  1. Cash discounts allowed to customers for prompt payment

 

 

Example 1

Record the cash discount of $14 allowed to a customer for prompt payment on the accounts receivable balance of $1,350.

Journal: Cash Receipts

Entry:

 

Debit

Credit

Account 201

Cash on Hand

$1,336

 

Account 953

Cash Discounts Allowed

$14

 

Account 220B

Accounts Receivable – Customers – Service & Parts

 

$1,350

Note:

Transactions, which are related, should be recorded in separate sub-accounts.  Sub-accounts serve to keep records organized for future analysis and auditing.  The sub-accounts in these examples are designated by a letter following the account number (suffix).  Please refer to your DSP's instructions for establishing sub-accounts.