Accounting Entries for Discount Sales and Trade Discounts

This topic is a supplement to emphasize specific topic issues: Accounting Treatment for Discount, Sales Return & Warranty. They may not exist or exist on the implementation of company's operation, in fact, Sales and Accounts Receivable roomates are two main accounts are much connected with these issues. The existence of chunks (discount), sales returns, and warranty is often lack sufficient portion in accounting discussions, both in books and in college. In fact, for the trading companies, especially retailers, discounts, sales returns and warranty are the issues that are very dominating in the administration of the company.

Discount

There are 2 types of discounts commonly provided to customers:

[1]. Trade Discount / Rebate (Pieces Trade / Rebate)

Trade Discount is also commonly called the " Rebate "adi kit Indonesia knew that the term"Trade Pieces "or" Rebate "is a piece of direct price reductions provided to customers at the time of booking (purchase) is done without looking at the factors (conditions) of others. will trade discount (trade pieces) exists if the company imposes "published price" in quotation (= offer) or company is lowering the price for a specific purpose in season (event) specific .

Example:

PT. Royal Bali Shining is a computer retail merchants that sell computer Type X. Cost of Goods Sold computer type X is Rp 3,500,000 / unit. Freight to the customer calculated Rp 100,000 / unit. PT. Royal Bali Shining set a 50% profit, so that the net price be = (Rp 3,500,000 +100,000) + (50% x (Rp 3, 500,000 +100,000) = Rp 5,400,000., But for the consideration of marketing strategy, PT. Royal Bali Shining labeling Rp 6,000,000 / unit in the catalog (brochure) sale (in the world of trading is known as the "Published Price). Thus, for every unit sold, PT. Shining Royal Bali will give a discount of Rp 600,000. Pieces is called the "Trade Discount / Rebate (Pieces Trade / Rabat)" . Amount of trade discount is different from industry to industry, from market to market, from companies to other companies. So to say the amount of trade discount depends on the policy (policies) of each company .

For every unit sold will be recorded with the journal:

[Debit]. Cash / Receivable = Rp 5,400,000
[Debit]. Trade Discount (Rabat) = Rp 600,000
[Credit]. Gross sales (Gross Sales) = Rp 6,000,000

Note:

* Cash / Receivables will enter into Balance Sheet
* Trade Discount will enter Statament k eke Income (Profit / Loss) together with Gross Sales.So the sales structure in the Income Statement would be:

Gross Sales = Rp 6,000,000
[minus]
Trade Discount = Rp 600,000
------------
= Net Sales = Rp 5,400,000

Thus, the requirement of recognition of sales on the net amount (net value) remains unfulfilled.

If domestic sales and the company is PFM, it will be payable VAT, so the journal becomes:

[Debit]. Cash / Accounts Receivable = Rp 5,940,000
[Debit]. Trade Discount = Rp 600,000
[Credit]. Gross Sales = Rp 6,000,000
[Credit]. Output VAT = USD 540,000

Most companies are not recorded in the books trade discount , which recorded only the net amount only, so that the journal becomes:

[Debit]. Cash / Accounts Receivable = Rp 5,940,000
[Credit]. Gross Sales = Rp 5,400,000
[Credit]. Output VAT = USD 540,000

So the structure of sales in the income statement does not show any trade discount. Strange (although not essentially wrong) is: The sales invoice discount to the trade appeared, but in the books which recorded just its net sales. Perhaps the inclusion of trade discount on the invoice only to demonstrate to customers that the company give a discount.

I suggest , that the evidence of a transaction is always equal to the record, though will be evidenced by his cash in too. It was necessary to facilitate the supervision and control.

Trade Discount can also occur because the companies did prices decline . This is usually done for a purpose or a particular reason (eg: promotion, items that are already out of date, or items that have been stored in warehouse for too long). Of course all companies acknowledge this discount. pencatatanya same procedure with trade discount previously.

[2]. Discount Sales / Cash Discount (Discount Sale).

This discount arising on the sale of credit, where the discount is usually given at the time of actual payment occurs. That is why the sales discount is often referred to as "Cash Discount" because of the discount given at the time of realization of the cash going on outside trade discount given. The amount of the discount sales (cash discount) depending on credit terms (terms) that has been set.

Example:

Continuing the previous example, On 20 June 2008, PT. Royal Bali Shining managed to sell 5 units of type X computer to the PT. Publish Subur Makmur with price Rp 6,000,000 / unit.payment terms (payment terms) 2/10; net 30 , meaning:

[1]. PT. Subur Makmur will receive a sales discount of 2% if the realization of the payment (settlement) is done 10 days after the item is received or earlier (21 s / d 30 June 2008). Well that's a discount of 2% is referred to as "Cash (Sales Discount)".

[2]. Meanwhile, if payment is made after that, then the discount will no longer apply.Repayment no later than 30 days after delivery (20 July 2008).

Sales transaction on June 20, 2008 (Pt. RBC is PFM), recorded with the journal:

[Debit]. Accounts Receivable = Rp 29,700,000
[Debit]. Trade Discount = Rp 3,000,000
[Credit]. Gross Sales = USD 30,000,000
[Credit]. Output VAT = USD 2,700,000

Note:
* Accounts Receivables = (Gross Sales-Trade Discount) + VAT
* Trade Discount = Rp 600,000 x 5
* Gross Sales = Rp 6,000,000 x 5
* VAT output = 10% x (Rp 30,000,000 - 3,000,000)

If PT. Subur Makmur pay off the debt later than 10 days after delivery (30 June), then the PT.Royal Bali Shining will give a discount of Rp 2% of Net Sales, for the repayment will be recorded with the journal:

[Debit]. Cash = USD 29,106,000
[Debit]. Sales (Cash) Discount = Rp 540,000
[Debit]. Output VAT = Rp 54,000
[Credit]. Accounts Receivable = Rp 29,700,000

Note:

* Sales Discount = 2% x (30,000,000-3,000,000)
* Sales discount followed by the publication of "Output Tax Invoice (FPK) above Discount" to be sent to PT. Subur Makmur, therefore, cash receipts will be reduced by sales discounts plus top discount FPK published. Furthermore, in the company's books, the output VAT was also in the discharge of FKP discount
* As with trade discount, sales discounts will be deductible sales.