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Accounting treatment of referral discount.

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Querist : Anonymous

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Querist : Anonymous (Querist)
18 December 2015 Hi
I would like to know that in a trading concern, in case of referral discounts (for instance, discount provided due to referral by friend), what should be the accounting entry? Also, under Sales, should we show the discount amount separately and Gross sale amount separately or we should show sales amount after reducing Discount amount?

Any help in this regard would be appreciated.
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
19 December 2015 It is kind of trade discount, you can reduce from sale and show the sale net amount
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Querist : Anonymous

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Querist : Anonymous (Querist)
19 December 2015 Thanks for the reply. Accordingly, I believe we will be charging VAT (Haryana VAT) after this discount.
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CMA Ramesh Krishnan

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CMA Ramesh Krishnan (Expert)
19 December 2015 yes. you can charge VAT after discount since it is trade discount nature

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