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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 December 10, 2018

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Level 15

Discounts vs sales discounts, which account to use?

@ 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

19 Comments 19
Highlighted
Level 15

Discounts vs sales discounts, which account to use?

@ 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

Highlighted
Level 2

Discounts vs sales discounts, which account to use?

Thanks Rustler! :smile:
Highlighted
Level 2

Discounts vs sales discounts, which account to use?

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! =)
Highlighted
Level 15

Discounts vs sales discounts, which account to use?

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."

Highlighted
Level 15

Discounts vs sales discounts, which account to use?

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
Highlighted
Level 1

Discounts vs sales discounts, which account to use?

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

Highlighted
QuickBooks Team

Discounts vs sales discounts, which account to use?

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.

Highlighted
Level 1

Discounts vs sales discounts, which account to use?

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? 

Highlighted
Level 1

Discounts vs sales discounts, which account to use?

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...

Highlighted
Moderator

Discounts vs sales discounts, which account to use?

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. 

Highlighted
Level 1

Discounts vs sales discounts, which account to use?

On QBDesktop, I applied a discount to an invoice when I received an underpayment for that invoice.

 

On a different invoice (for the same customer), the same discount is appearing, and is reducing the amount of the invoice owed in receivables.  I have gone every way around both invoices to see if I accidently set the discount up as "fixed", but cannot find that I did.

 

I need to delete the discount from the UNPAID second invoice. 

 

ALSO~ Is there a way to generate a report that shows ALL the discounts applied to invoices for a specific time frame? TIA

Highlighted
QuickBooks Team

Discounts vs sales discounts, which account to use?

That unexpected behavior can be caused by a corrupted file, iMetal. I'll share a few steps to fix it.

 

First, let's remove the discount item from the invoice. Here's how:

  1. Open the invoice.
  2. Click the discount line item, then delete it.
  3. Click Save & Close

Then, let's run the Verify/Rebuild utility to detect the data damage. Here's how:

  1. Click File.
  2. Go to Utilities, then choose Verify Data.
  3. If QuickBooks detected no problems, there's no further action needed. If you receive a message, "Your data has lost integrity", the file is damaged. Just continue to Rebuild Data to correct the problem.
  4. When you Rebuild Data, you'll receive a message to back up your company file, just click OK. The utility starts as soon as the back up is finished.
  5. Click OK when you get the message "Rebuild has completed".
  6. Run Verify Data again to check for remaining data damage.

Lastly, let's pull up the Sales by Customer Detail report. This way, you'll see the discounts applied to invoices. Here's how:

  1. Click Reports.
  2. Go to Sales
  3. Select Sales by Customer Detail.
  4. Manually change the dates, then click Refresh

 

You can also customize the report, add or delete columns and add or remove information. 

 

Feel free to shoot a comment below if you need more help with this. 

Highlighted
Level 1

Discounts vs sales discounts, which account to use?

Thank You! Which Account (#3) should I assign the Discount to?

Highlighted
QuickBooks Team

Discounts vs sales discounts, which account to use?

Thanks for joining the thread, @LuxuryPools.

 

To determine which account you need to select for the discount, I suggest reaching out to your accountant. They can tell you which account will reflect the discount correctly because they know more about your books. You can also ask other Community members their suggestions as well. 

 

Feel free to comment below if you have any other questions. Best wishes!

Highlighted
Level 1

Discounts vs sales discounts, which account to use?

@Rustler Thank you for the good help with this.  I too have the same questions, but I am curious, if an income account is to be used for Sales Discounts, what Tax Line Mapping should be used?  The only Tax Line I notice, that refers to discounts of any kind, is "other deductions: Discounts Given".  This would lead one to believe this is a tax line map that should be used for Sales Discounts as it says "Discounts Given".  Would you happen to know why that Tax Line exists?

 

Thank you.

Highlighted
Level 15

Discounts vs sales discounts, which account to use?


@chuck22 wrote:

@Rustler Thank you for the good help with this.  I too have the same questions, but I am curious, if an income account is to be used for Sales Discounts, what Tax Line Mapping should be used?  The only Tax Line I notice, that refers to discounts of any kind, is "other deductions: Discounts Given".  This would lead one to believe this is a tax line map that should be used for Sales Discounts as it says "Discounts Given".  Would you happen to know why that Tax Line exists?

 

Thank you.


Sales discounts are a reduction in income so they are rolled up in gross income,  Under other deductions:discounts given - to be honest I have no idea, I have seen it but never used that particular line item

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Level 2

Discounts vs sales discounts, which account to use?

Hello,

 

I have a similar question for a client related to discounts and I wanted to see if you can assist me.

 

We have clients who may take a remittance deduction from our invoices because previous agreements have permitted a backhaul allowance (loosely defined as a discount per case in exchange for the client using their resources to transport our merchandise).  I am capable of creating the account but I want to make sure all of the proper designations used.

 

Within QuickBooks I propose the following to record these transactions:

  • Item name “Backhaul”
  • Description of item “Backhaul allowance per case”
  • Type of entry “Discount”
  • The account of record “Sales Discounts: Off invoice/Rebates”
  • Price per case “-.25”

I am unsure of the assignment of each of these parameters.  Likewise, I don’t know about using negative values for the numeric entry.  But the numeric value will have to be calculated for every invoice since a quantity cannot be entered for this type of item.

Highlighted
Moderator

Discounts vs sales discounts, which account to use?

You're on the right track, lk02092018.

 

You can record this item, then, use it when you create the invoice. However, you'll have to leave the price as blank.

 

When adding the backhaul allowance on the invoice, that's when you enter the negative amount. As long as the invoice's total would not exceed more than 0 or negative.

 

Stay in touch with me if you have other questions.

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Level 2

Discounts vs sales discounts, which account to use?

Thank you!  I appreciate the feedback.

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