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jasonnyc258
Level 1

How to account for a discount on an invoice recorded in previous year

So i have an Bill for $100 recorded in 2021. The invoice was paid in 2022 with a $10 discount, so the client paid $90. Since the invoice was recorded in 2021 as a total expense, how do i record the $10 as income in 2022 to balance the books ? Any help or examples of bookkeeping entry for this would be great.. thank you
5 Comments 5
DivinaMercy_N
Moderator

How to account for a discount on an invoice recorded in previous year

Welcome to the Community, @jasonnyc258. I've come to help you record the discount in QuickBooks Online (QBO).

 

In QBO, you can simply edit the invoice transaction to add the discount before receiving the payment. Before doing so, ensure that the discount settings is enabled. Once done, follow these steps:

  1. In your QBO account, go to the Sales menu.
  2. Then, select Invoices. From there, find the specific invoice.
  3. Next, click the drop-down arrow under Action and pick View/Edit.
  4. Once opened, apply the discount under the Discount field or as a line item with a negative amount (-$10).
  5. When finished, click Save and then, receive the payment.  

 

If you want to show the discount on a different date, you can record it as a separate transaction. For more details on applying a discount in QBO, feel free to visit this article: Add a discount to an invoice or sales receipt in QuickBooks Online.

 

Getting a list of your customers’ outstanding balances will help you determine how much still due and how long they’re past due are. To have this data, simply run the accounts receivable aging report.

 

Leave a comment below if you have any other questions about recording discounts in QBO. I'm just around the corner to help. Keep safe always.

Rainflurry
Level 12

How to account for a discount on an invoice recorded in previous year

@jasonnyc258 

 

Is there still $10 due on the bill?  If not, where did the $10 go?

 

Is your client on accrual or cash basis?  If they are cash basis, you can adjust the original invoice to include the discount to bring the bill down to $90 because the expense was not booked in 2021, it was booked when paid in 2022.  If they are on accrual and they haven't closed out 2021, you can do the same.  If they have closed out 2021, then there should still be $10 due on the bill which can be cleared with a credit memo dated 2022 and assigned to the same expense account as the original invoice.  Apply the credit memo to cover the $10 outstanding on the bill. 

jasonnyc258
Level 1

How to account for a discount on an invoice recorded in previous year

Hi..

Its on accrual basis, and 2021 has been closed out.  So i need to record this as income somehow since

i recorded the full $100 amount as an expense, but now only really 90$ when it was paid.  there will be no credit going forward to customer.  it shows at $10 outstanding to client

 

 

jasonnyc258
Level 1

How to account for a discount on an invoice recorded in previous year

Hi. The year as been closed out (accrual), so i have the $10 as a credit to client. which now needs to be recorded as some sort of Journal Entry as income? 

 

thank you

 

 

Rainflurry
Level 12

How to account for a discount on an invoice recorded in previous year

@jasonnyc258 

 

Create a bill credit (Enter Bills>Credit) for $10 and assign it to the same expense account as the original invoice.  Then, pay the bill by applying the credit.  This will create a journal entry that debits (reduces) A/P and credits (reduces) the expense.  The vendor balance due will be $0 and you should be all set.  Assigning it to income is not really accurate as the discount was an expense reduction, not income.  Both are credit entries so the result is the same. 

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