Tag Archives: Discount Item

QuickBooks Discount item

One of my customers was asking me whether she can create a discount to a customer without associate it to a GST code of 7% GST.

This is an accounting question, as an accountant you should know the answer. If not, best person to ask is IRAS, not me. Here, I will just simply highlight the differences.

To a layman, if you create an invoice to your customer with $100.00 (before tax). The transaction will be debiting Accounts Receivable account $107.00 and crediting Sales $100.00 and Tax Payable $7.00 (based on 7% GST).

Journal:

DR. Accounts Receivable $107.00

CR. Sales $100.00

CR. Tax Payable $7.00

If you add a discount of $10 to this invoice and you do not wanted to charge a tax (GST) on this discount item. Then, the transaction will be debiting Account Receivable account $97.00, crediting Sales $100.00, debiting Sales Discount $10.00 and crediting Tax payable account $7.00.

Journal:

DR. Account Receivable $97.00

DR. Sales Discount $10.00

CR. Sales $100.00

CR. Tax Payable $7.00

Is this correct?

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