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Level 1

How to record discounts received from suppliers ?

I always get a discount from my supplier on every bill. How should I record that discount ?

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Best answer 09-26-2019

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Level 15

How to record discounts received from suppliers ?

I disagree

it depends on the discount, if the discount is a sales discount you should edit the total price of each item.  Sales discounts are not booked separately

If it is an early payment discount, that is a credit memo using an income account to book the amount, usually other income.

For Merchandise purchased during the year, cost means the invoice price minus appropriate discount plus transportation or other charges incurred in acquiring the goods.  You must reduce the cost of  inventory by a trade (or quantity) discount.


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Highlighted
Level 15

How to record discounts received from suppliers ?

I disagree

it depends on the discount, if the discount is a sales discount you should edit the total price of each item.  Sales discounts are not booked separately

If it is an early payment discount, that is a credit memo using an income account to book the amount, usually other income.

For Merchandise purchased during the year, cost means the invoice price minus appropriate discount plus transportation or other charges incurred in acquiring the goods.  You must reduce the cost of  inventory by a trade (or quantity) discount.


View solution in original post

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Community Champion

How to record discounts received from suppliers ?

Record a Vendor Credit. I prefer using an income account called Discounts/Refunds but you can also post as a contra-expense either to a group discount expense account or to the same expense account the bill is for. Then when paying bill apply the credit

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Level 1

How to record discounts received from suppliers ?

But does this affect my COS , when is draw my reports I want the margin to be correct and to take in account the purchase price less the discounts.

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Moderator

How to record discounts received from suppliers ?

Welcome to the thread, @MDM18.

 

In QuickBooks Online, having a discount from a vendor will not affect the Cost of Goods Sold (COGS) of the Inventory item. If you wish to get this affected, then you can create a journal entry that will affect the COGS and the vendor balance. 

 

To create a journal entry, here's what you'll need to do:

  1. In the left menu, select the + New button.
  2. Pick Journal Entry.
  3. Fill out the necessary fields.
  4. Choose Save and close

 However, before we proceed with the steps, I highly suggest consulting your accountant or accounting professional for guidance on which account receives the debit and credit side of the transaction.

 

Additionally, I want you to get the most out of QuickBooks for your business. You can check some articles that are designed to help you get acclimated with the software. They can be accessed at the following link: QuickBooks Tutorials.

 

If there's anything else I can do for you, let me know by commenting below. I'd be happy to further assist you. Have a great day.