Chapter Return, discounts and sales tax

Chapter 5. Return, discounts and sales tax

Sales Returns (returns inwards)	Dr Sales Returns Cr Cash/Receivables
Purchase Returns (return outwards)	Dr Payables Cr Purchase Returns

Returns

Discounts
Trade discount

Settlement discount

Discount received:

Debit: Payables ( to reduce the liability due to the supplier)
Credit: Discount received

Seller Respective

Purchaser Respective

Sales Tax
Sales tax (Output tax) – Purchase tax (input tax)= Tax paid to Tax Authority