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Purchases Discounts - this payment to Music Suppliers Inc...

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Purchases Discounts Companies that take advantage of sales discounts usually record them in an account named  purchases discounts , which is another contra-expense account that is subtracted from purchases on  the income statement. If Music Suppliers, Inc., offers the terms 2/10, n/30 and Music World pays the  invoice's outstanding balance of $900 within ten days, Music World takes an $18 discount. To record 
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Unformatted text preview: this payment to Music Suppliers, Inc., Music World makes a compound journal entry that decreases (debits) accounts payable for $900, decreases (credits) cash for $882, and increases (credits) purchases discounts for $18....
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