Purchases Discounts

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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
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 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

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....
View Full Document

Ask a homework question - tutors are online