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taken from the Accounting Made Easy e-book








DISCOUNTS
EARLY SETTLEMENT DISCOUNT ALLOWED
  
This discount is allowed to your debtors or customers at the time of the settlement of their account. You may agree with your customers to allow a certain percentage of discount allowed e.g. 2½ % if they settle the full amount on an invoice within 30 days). This discount is recorded when a debtor or customer settles the full invoice within the specified time. This discount needs to be entered as an expense in a Discount Allowed account and will reduce the net profit and will have no effect on the gross profit.

This discount will be allowed when the payment is actually received from the debtor or customer before the agreed period, and will be recorded in the receipts journal.

To Enter a Receipt with Discount Allowed to a Debtor:
 Click on the speed button or icon. You may also press the key on your keyboard. Alternatively you may press the and and keys on your keyboard. The Batch Type screen will be displayed.
Select the Receipts Journal for the specific Bank Account, in which you wish to enter the receipts or credits from the list displaying the available Batch Types and click on the button. The Batch Entry screen for the selected Receipts Journal will be displayed.
Capture the Receipt from the Deposit slips or Receipts as follows:
  1. The amount received and deposited -You need to record the deposit number, date of the transaction, details of the transaction, select the debtor account and select the No Tax code and enter the amount in the credit column. Since the Debtor, only paid the net amount (after any discounts were allowed), the debtor account or the specific invoice he / she is settling, will still reflect an outstanding amount. To correct this, you need to record the discount allowed.

  2. The amount of Discount Allowed - To enter the discount allowed, use the same reference numbers, select the Debtor's account, select the No Tax code, and enter the amount (Inclusive of VAT) in the credit column. To create the contra transaction, use the same reference numbers, select the Discount Allowed expense account, and select the Output Tax code and enter the amount (excluding VAT).

Since the Receipts Journal is set to allow credit amount entry only, you need to enter a negative "-" minus sign) in before you type in the amount in the credit column. As soon as you press the key on you keyboard, TurboCASH will automatically transfer the amount to the to debit column.

After entering the transactions for the amount received from the debtor as well as the discount allowed in the receipts journal, it will be displayed as follows:

Minimise button - click to minimise this screen. Restore button - click to display this screen to full size and click again to restore it to its original size. Title bar - double-click to display the screen in full size or to return to the normal size. Title bar. The name of the selected batch. Title bar. The Alias for the selected batch. Close button - Click to close or exit this screen. Click to delete a selected transaction. Click to insert a row or line above a selected transaction. Click to balance the batch, if the batch is not already in balance. Click to post or update the transactions to the ledger, if the batch is in balance. Click to enter transactions Inclusive or Exclusive of VAT. Click to list the entries or transactions entered into the batch. Click to access more processing options for the batch. Click to set the Options for this batch. Enter the reference number for the transaction. Use the same reference number for all 3 entries. Enter or select the date of the transaction. Use the same date for all 3 entries. Enter a description for the transaction. Select the Debtor Account. Leave blank for the rest of the other 2 transactions. Leave blank for the first 2 entries. Enter credit amounts for accounts in this column. Scroll bar - scroll to view more transactions entered in the batch. Select the Debtor Account. Select the Discount Allowed Expense Account. Select the Tax code or VAT account for Discount Allowed. Enter amount prefixed with a minus sign (-) to create the debit transaction for the Discount Allowed account. Must be blank.

If the debtor account was set to be an Open Item Debtor account on the Edit - Accounts - Debtor (Accounting Information tab), the Open Item Selection screen will be displayed for each transaction you allocate to the Debtor account. All you need to do, is to select the specific invoice the debtor is paying or settling for both the amount received and the amount of the discount allowed and press the key on your keyboard to link the transactions and to close this screen.

Title bar. Close button - Click to close or exit this screen. An arrow pointer will indicate the selected transaction. The date of the debit transaction entered in the Sales Journal or the date of an Invoice or POS Invoice. The Reference number transaction entered in the Sales Journal or the document number of an Invoice or POS Invoice. The deposit or receipt reference number in the Receipts batch. The amount of the transaction. The outstanding amount will be a less than the transaction amount, if a previous payment is linked to a transaction. The amount of the deposit or receipt in the Receipts batch. Vertical scroll bar - move up or down to view more transactions, if necessary.

The Open Item Selection screen will also be displayed when the amount for the Discount Allowed is entered for the Open Item Debtor Account.

Title bar. Close button - Click to close or exit this screen. An arrow pointer will indicate the selected transaction. The date of the debit transaction entered in the Sales Journal or the date of an Invoice or POS Invoice. The Reference number transaction entered in the Sales Journal or the document number of an Invoice or POS Invoice. The deposit or receipt reference number in the Receipts batch. The amount of the transaction. The outstanding amount will be a less than the transaction amount, if a previous payment is linked to a transaction. The amount of the deposit or receipt in the Receipts batch. Vertical scroll bar - move up or down to view more transactions, if necessary.
After entering all the receipt transactions, you need to click on the speed button or icon press the key on your keyboard. TurboCASH will create the balancing entry to the bank and the discount allowed account.

Minimise button - click to minimise this screen. Restore button - click to display this screen to full size and click again to restore it to its original size. Title bar - double-click to display the screen in full size or to return to the normal size. Title bar. The name of the selected batch. Title bar. The Alias for the selected batch. Close button - Click to close or exit this screen. Click to delete a selected transaction. Click to insert a row or line above a selected transaction. Click to balance the batch, if the batch is not already in balance. Click to post or update the transactions to the ledger, if the batch is in balance. Click to enter transactions Inclusive or Exclusive of VAT. Click to list the entries or transactions entered into the batch. Click to access more processing options for the batch. Click to set the Options for this batch. Enter the reference number for the transaction. Use the same reference number for all 3 entries. Enter or select the date of the transaction. Use the same date for all 3 entries. Enter a description for the transaction. Select the Debtor Account. Leave blank for the rest of the other 2 transactions. Leave blank for the first 2 entries. Enter credit amounts for accounts in this column. Scroll bar - scroll to view more transactions entered in the batch. Select the Debtor Account. Select the Discount Allowed Expense Account. Select the Tax code or VAT account for Discount Allowed. Enter amount prefixed with a minus sign (-) to create the debit transaction for the Discount Allowed account. Must be blank. TurboCASH will create balancing entries to the Bank and the VAT account when the batch is balanced.
If the Consolidate balancing option is selected in the Setup Options for this batch, the description for the balancing entries or transactions, will be displayed as "BALANCING ENTRY Receipts Jnl". It is a good idea to overtype this description as it is not very meaningful to an outside auditor or accountant. If you overtype these it will definitely make it easier to trace and reconcile transactions. Click on the speed button or icon or press the key on your keyboard to change the alias. This will help you if you wish to identify a specific batch, if you wish to generate a batch type report or if you wish to export posted batches to a file.
Click on the speed button or icon or press the key on your keyboard to list the batch. It is a good idea to list the batch and check the entries on the batch thoroughly. If there are any errors, you may edit the batch before posting the batch.
Click on the speed button or icon or press the key on your keyboard to post the batch. TurboCASH will post the entries to debit the total receipts to the current bank account and credit the selected debtor accounts. The accounts will be displayed as follows:






A debit balance for the amount of discount allowed is created on the Debtor's account, since the debtor only paid the net amount (after discount is allowed). The first transaction for the receipt of the actual moneys received is entered in the receipts journal, created a credit transaction in the debtors account and a debit transaction to the bank account.
The discount allowed transaction cleared the debtor's account or the invoice which was settled and the created an expense transaction. The VAT is debited to the Output VAT account, since the VAT was already credited to the Output VAT account when the selling transaction was posted to the ledger.

If your debtors are mostly individuals, not registered as VAT vendors, you can record the Discount Allowed transaction in the Receipts Journal.

It is recommended that if VAT is applicable, and the Debtor is a registered VAT vendor, that only the first transaction, i.e. the actual amount received from the Debtor is captured in the Receipts Journal. A hand-written credit note (only for the Discount allowed and the VAT on the Discount Allowed) needs to be issued and captured in the Sales Journal as a return or in the Debtor Allowances or Sales Returns Journal. This will ensure that the Debtor correct his / her Input Tax if the Debtor is a Registered VAT vendor.

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