I am no accountant, but that doesn't sound quite correct.
If you put the Cash Discounts account under Expenses, then that would be
a contra-account as it reduces the price of your expenses you pay the
wholesaler. So that credit is correct, but I don't see that there should
be a debit to your checking account. It isn't like you received funds in
return, you just paid less out. So that might look like:
Dr. Expenses:something 100
Cr. Expenses:Cash Discounts Received 10
Cr. Assets:Checking 90
On the other side, when you are the seller and offer a cash discount,
that too could be an expense (but this time not contra-balanced)
however, it might be best *not* to use the same account as above due to
the potential need to track the discounts you offer being muddled with
the discounts you receive. As well, there shouldn't be an equal debit to
Checking here, but rather less money received like so:
Dr. Assets:Checking 90
Dr. Expenses:Cash Discounts Offered 10
Cr. Income:Sales 100
Some texts and accountants might counsel that this Cash Discount account
should instead be a sub contra-account of Income:Sales as it is really a
reduction of Sales, rather than an expense, but that would depend on
your needs, situation, and legal requirements.
*notice - none of the above is specific to GnuCash, thus, this is an
'accounting question', not 'how do I do this in GnuCash' question.
We're happy to offer *ideas* here on such questions, but *NONE* of those
ideas are *advice*.
Regards,
Adrien
On 5/15/24 5:25 PM, nisp1953 wrote:
WHen I get a discount from a wholesaler, then there is a credit to
Cash discounts,
which is an expense. There is also a corresponding debit to my
checking account.
When I issue a site wide discount there is a debit to the cash
discount but a credit
to the checking account. Am I doing that correctly?
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