PRC-1 · Chapter 2 · Question 49 of 100
When credit customers settle their accounts and take advantage of early payment discounts, the amounts are logged in the discount allowed column of the three-column cash book. What is the final double-entry destination for the periodic total of this column?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Discount Allowed account, Credit Trade Receivables account
Explanation
The total of the discount allowed column represents an expense to the business (Debit Discount Allowed) and reduces the total amount owed by customers (Credit Trade Receivables control account).
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