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Level 1

Discounts vs sales discounts, which account to use?

We often give discounts to customers and dealers. I've created items as a "discount" type, but am unsure of which account to assign. There is "discount" which is a COGS account; and there is "sales discount" which is an income account (that's the one I've been choosing). Which one do I use to show I've given something away?

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Best answer 12-10-2018

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Level 15

@ filippaleedham There should not be a discount account u...

@ filippaleedham

There should not be a discount account under COGS, you do not discount what you purchase, you enter the actual amount paid

Sales discounts should post to an income account you create for that, sounds like you have one, use that.

on the P&L sales discounts show as a separate account and will lower gross income

@ nica

Once you use it on an invoice, its amount will automatically be deducted from your income account.

see my last sentence above



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Highlighted
Level 15

@ filippaleedham There should not be a discount account u...

@ filippaleedham

There should not be a discount account under COGS, you do not discount what you purchase, you enter the actual amount paid

Sales discounts should post to an income account you create for that, sounds like you have one, use that.

on the P&L sales discounts show as a separate account and will lower gross income

@ nica

Once you use it on an invoice, its amount will automatically be deducted from your income account.

see my last sentence above



View solution in original post

Level 2

Thanks Rustler!

Thanks Rustler! :smile:
Level 2

Hello filippaleedham! Thanks for posting your question....

Hello filippaleedham!

Thanks for posting your question.

Sales Discounts are contra-income accounts. This can be tracked by creating a discount item and using it on sales transactions.

Please check this article for more information. http://support.quickbooks.intuit.com/support/pages/inproducthelp/core/qb2k13/contentpackage/core/sal...

Hope this helps.

Have a Great Weekend! =)
Level 15

They might be using a separate COGS account to hold "purc...

They might be using a separate COGS account to hold "purchase discounts" which is Contra-accounting Expense. I have seen this in files, where they enter the Gross cost and "take a discount."

Level 15

As you know I advocate tax accounting, and doing that is...

As you know I advocate tax accounting, and doing that is against the IRS specific rules.
But I also know that if you ask 4 accountants one question you can get 5 different answers
Level 1

Re: Hello filippaleedham! Thanks for posting your question....

The link is bad. How do you create a sales discount or contra income? Do mean simply an expense? They sell that software for the layman.. and all I see are a lot more terms I need to know. Why not just tell us what buttons to push?  lol

QuickBooks Team

Re: Hello filippaleedham! Thanks for posting your question....

Thank you for joining this thread, @xact2019.

 

I'd be glad to help walk you through creating a sales discount and add it as a line item on the invoice. Let's get started! 

 

  1. Go to List.
  2. Choose Item List.
  3. Click the Item drop-down arrow at the bottom of the Item List window.
  4. Select New.
  5. Click the Type drop-down, choose Discount.   
  6. Enter the Description and the Amount or % of the discount.
  7. Choose which account in the Chart of Accounts will the discount be mapped.
  8. Select the Tax Code of the Discount.
    • Taxable
    • Non-Taxable
  9. Click Ok

 

That should do it! For more insights, you may check out this article: Add, edit, and delete items.

 

Let me know here in the Community on how it works on your end. I'm always here to help answer your inquiries about creating sales discounts in QuickBooks Desktop.

Level 1

Re: @ filippaleedham There should not be a discount account u...

I used your suggestion of posting the discount to an income account and entering it in the invoice.  It works great for accrual basis but when I change to a cash basis P&L, the discount did not move over to the month I received payment.  It stayed in the month the invoice was created and it looked like it started prorating the discount amount.

 

Entering the discount in the "Discount and Credit" module of the Customer payments works great for Cash Basis but not accrual basis.

 

Entering the discount straight into the invoice works wonderfully in the Accrual basis  but not in the cash basis.

 

Is anyone else having this problem and is there a simple fix for me? 

Level 1

Re: Hello filippaleedham! Thanks for posting your question....

Nica, I tried opening your link but nothing is coming up, can you download it again?  I'm using Chrome.

 

http://support.quickbooks.intuit.com/support/pages/inproducthelp/core/qb2k13/contentpackage/core/sal...

Moderator

Re: Hello filippaleedham! Thanks for posting your question....

Hi there, AGordon.

 

Thanks for joining us in this thread. I'm here to share a few details about entering discounts in QuickBooks Desktop.

 

When using the Cash method, it is beneficial in terms of tracking how much cash you received at any given time. If you've applied a discount to the customer's payment transaction, the amount will probably show up on your Profit and Loss Report.

 

Otherwise, the discounted amount will show up on the report using the Accrual method if you've applied a discount on the invoice. 

 

You can check out this article that will give you detailed information with handling cash basis sales tax.

 

That should do it. Please leave a comment below if you have further questions. I'll get them answered for you. 

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