When a client takes advantage of prompt pay 2% cash discount, how is it shown in a T-account? Also, on the other hand, when I take a 2% early pay discount when paying a bill, how is that shown on a T-account? The specifics are that the customer took a $

ANSWER

The BIDaWIZ Team's Answer:

You will debit a contra sales account, titled "sales discounts taken," in the amount

of $240, and you will credit the "accounts receivable" account, in the amount of $240.

You will debit the "accounts payable" account, in the amount of $150, and you will

credit a liability contra account, titled "purchase discounts received," in the amount

of $150.