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MDCahill
Level 1

Vendor early payment discounts

We are a wholesale distributor for pipe, valves and fittings.  Some of our vendors offer a 2% 10 Net 30 for early payment.  An example is tube fittings purchased from a vendor that offers 2% 10 Net 30 days.  The invoice will be for $10,000 for a 15 line purchase order with varying quantities on each line.  

 

I have started taking advantage of the discount but noticed that the discount taken at time of payment is falling into an account that is incorrect.  I was going to change it but then I started questioning if the discount should be recorded under COGS or other income.   Any insight would be appreciated. 

 

Thanks in advance!

 

 

Solved
Best answer March 22, 2021

Best Answers
ShiellaGraceA
QuickBooks Team

Vendor early payment discounts

Thanks for coming by, @MDCahill.

 

I have some information about how discounts should be recorded in QuickBooks. Since the discount is applied when paying the bills, you'll want to record it as income. There will be a price reduction instead of adding to the cost. However, I'd still recommend consulting with an accountant to make sure your books are accurate.

 

To do this:

 

  1. Go to the Vendors menu. Then, select Pay Bills.
  2. Choose the vendor bill. Then, tap the Set Discount button.
  3. Enter the Amount of Discount. Pick the Discount Account. See the image below.
  4. You can click Add New if the income account is not yet listed.
  5. Click Done. Then, Pay Selected Bills.

 

 

Check out this guide for more information about paying bills: Pay bills in QuickBooks Desktop.

 

If you need help with other tasks in QBDT, feel free to browse this link here to go to our general topics with articles. Just look for responses that suit your concern.

 

Don't hesitate to leave a comment below if you still have questions or concerns with vendor. I'm always here for you. Take care and have a nice day ahead.

View solution in original post

1 Comment
ShiellaGraceA
QuickBooks Team

Vendor early payment discounts

Thanks for coming by, @MDCahill.

 

I have some information about how discounts should be recorded in QuickBooks. Since the discount is applied when paying the bills, you'll want to record it as income. There will be a price reduction instead of adding to the cost. However, I'd still recommend consulting with an accountant to make sure your books are accurate.

 

To do this:

 

  1. Go to the Vendors menu. Then, select Pay Bills.
  2. Choose the vendor bill. Then, tap the Set Discount button.
  3. Enter the Amount of Discount. Pick the Discount Account. See the image below.
  4. You can click Add New if the income account is not yet listed.
  5. Click Done. Then, Pay Selected Bills.

 

 

Check out this guide for more information about paying bills: Pay bills in QuickBooks Desktop.

 

If you need help with other tasks in QBDT, feel free to browse this link here to go to our general topics with articles. Just look for responses that suit your concern.

 

Don't hesitate to leave a comment below if you still have questions or concerns with vendor. I'm always here for you. Take care and have a nice day ahead.

View solution in original post

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