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 |
|
|
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.