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In a problem, 'discount allowed by suppliers' of Rs 3,500 is posted in the solution as:
ADiscount allowed, in total debtors account
BDiscount received, in total creditors account
CBad debts written off in the debtors account
DA deduction from the closing stock figure
Answer & Solution
Correct answer: B. Discount received, in total creditors account
1. The phrase describes the transaction from the supplier's point of view, which is what makes it confusing.
2. A discount allowed by a supplier is a discount received by the trader.
3. It therefore belongs to the total creditors account, on the debit side, because it reduced the amount owed to creditors.
4. Discount allowed to customers is the mirror item, appearing on the credit side of the total debtors account.
5. The textbook deliberately puts both in one illustration, so reading whose discount it is decides which account it enters.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 1 "Accounts from Incomplete Records", Illustration 16_
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