I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

PART E: PREPARING A TRIAL BALANCE 

 

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If it transpires that the customer does not take up the discount when they make payment, then the 

amount of the discount is subsequently recognised as revenue. 

Conversely, if the customer is not expected to take up the discount, the full invoiced amount with no 

discount is recognised as revenue when recording the sale.  

If it transpires that the customer does take up the discount when they make payment, then revenue is 

subsequently reduced by the amount of the discount. 

You will be told in an exam question whether or not the business expects the customer to take up the 

discount. 

We will explain why the above treatment is necessary after the following example. 

2.2.3.1 Example: Settlement discounts allowed 1 

Chippies sells goods to Table Tops at a price of $7,600 including delivery. Table Tops is allowed 

60 days' credit before payment, but is also offered a discount of 5% for payment within 10 days of the 

invoice date. Chippies issues the following invoice to Table Tops. 

Same address

INVOICE TO:

DELIVER TO

Table Tops

112 Peters Square

Weyford

Kent CR2 2TA

Your order number:

13579A

2490

 1

Tables

Delivery

    250.00

 30

    100.00

   TOTAL:

   7,500.00

   7,600.00

  100.00

Item Code

 

 

Description

 

 

Quantity

    Unit Price

$

  Amount

$

Telephone Number 0171 123 4567

Northern Bank Code 20-25-42

Account Number 957023

Invoice Number: 

123456

Date:

01/08/X7

Account Number: 3365

INVOICE

Wood House

Richmans Road

LONDON SE1N 5AB

 

 

A discount of 5% of the full price applies if payment is made within 10 days.  

 

If you pay within 10 days the discounted price is: 

 

  TOTAL:      7,220.00 

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CHAPTER 14  

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