All 25 Control Accounts questions
More in Control Accounts
What entries appear in the purchases ledger control account? How does a control account help detect errors? What is a control account reconciliation? Why is a control account a form of internal control? How is a bad debt written off reflected in the sales ledger control account? How do dishonoured cheques appear in the sales ledger control account? What is teeming and lading and how do control accounts help detect it? How is refund to a customer shown in the sales ledger control account? Which errors affect the control account and which affect the list of balances? How is a contra/set-off recorded in the control accounts?
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Bookkeeping › Control Accounts

What is the effect of a discount allowed on the control accounts?

Intermediate

Answer

A discount allowed (to a customer for prompt payment) reduces the amount the customer pays, so it's credited to the sales ledger control account (and the customer's personal account) alongside the cash received, and debited to the discounts allowed expense account. The two credits (cash + discount) together clear the invoice.
Invoice 1,000 settled early with 20 discount:
  Cr SLCA: Bank 980 + Discount allowed 20 = 1,000
Real-world example When a customer takes a settlement discount, both the cash and the discount reduce the control account.

Common follow-ups: Which account is debited for discounts allowed? | Why does it reduce the control account?

Cash Book & Petty Cash Sales & Purchase Ledgers Control Accounts
All 25 Control Accounts questions