When a small business makes a financial transaction, the bookkeepers need to make an entry in their accounting journal to record the transaction. Often, the transaction is recorded in the general journal or, for the most active accounts, in a special journal. Here are the steps for handling a double-entry bookkeeping journal entry when selling a product or service for cash while offering a discount on the sale.
Example of a Discount Sale
Imagine you are the bookkeeper for XYZ Clothing Store. The store is having a sale and everything is 10% off. A customer has taken advantage of the sale and purchased
3 pairs of socks for $12.002 men’s shirts for $55.00
The sub-total, not including the discount, is $67.00. The sales tax in your state is 6%, making the sales tax due $4.02. The discount afforded to the customer is $6.70, making the sales total for the customer $64.32 ($67.00 + $4.02 less $6.70 from the discount) and $71.02 for XYZ ($67.00 + $4.02). Here is the bookkeeping entry you make, hopefully using accounting software, to record the journal transaction.
Step 1
First, enter a debit to cash for the amount of the sale after the 10% discount: $64.32.
Step 2
Then, enter a debit to discounts for the amount of the 10% discount: $6.70.
Step 3
Next, enter a credit of $67.00 to the Sales account and $4.02 to the Sales Tax Collected account (sales tax is 6%). For accurate accounting, the entries on the debit side and credit side should always balance.
How to Handle Cash Sale Journal Entries Without Discounts
This is an example of how to handle a double-entry bookkeeping journal entry when selling a product or service for cash with no offered discount. You are the bookkeeper for XYZ Clothing Store. A customer has just purchased the following items with cash:
three pairs of socks for $12.00two men’s shirts for $55.00
This subtotal before tax is $67.00. The sales tax in your state is 6%, making the total sales tax due $4.02 and the sales total $71.02. Here is the bookkeeping entry you make using your accounting software to record the journal transaction.
Step 1
First, enter a debit to cash for the total sale: $71.02.
Step 2
Next, enter a credit to the Sales and Sales Tax Collected accounts for $67.00 and $4.02, respectively. Remember, the entries on the debit side and credit side should always balance.
