Cumulative discount received entry posting.

[Former Member]

Hi all,

The situation is, our company purchases raw material from a particular vendor. In case the purchases exceed a particular limit (amount) in a year the supplier gives a lump sum discount on all the previous purchases done in the year. this discount amount is received as a cheque which amounts to a few lakh rupees. now the client wants to book this amount as discount received. how do i proceed with the posting of such transaction?? would it be appropriate if i remove the post automatically checkbox for discount received GL account an directly post a Journal entry to the account or is there any other way?? and if we do so wouldn't it be questioned during financial audit.?? Please suggest.

Thanks.

Pritesh Tatar.

[former_member220489 · Accepted solution]

Hi,

You can use Tcode FB65 to post Vendor Credit Memos.

Its a standard practice.

Regards,

Srinu

[Former Member · Accepted solution]

HI,

Thnx for the reply but vendor credit memo won't solve our problem because posting a credit memo would not generate the accounting entry that we require. The discount amount is received as incoming payment from the vendor so we require the discount received account to be debited which will not happen in case of credit memo.

Thanks,

Pritesh Tatar.

[former_member220489 · Accepted solution]

Hi,

As you have already mentioend, you can enter your the Discount Received GL account for Credit Line item in FB65, provided the check box Post Automatically only is deselected in GL master.

Regards,

Srinu

[suma_mani · Accepted solution]

Hi Pritesh,

There is no alternative method to post such business transactions like cumulative cash discount received from vendor. You have to book credit memo to vendor as below

Vendor Dr.......Dr

To Cash discount Received ....Cr

Incoming Payment :-

Bank Clearing account.......Dr

To Vendor account................Cr

You can use separate GL account ,if any issue with auditors ( Post automatically check box)

Rgds

Suma Mani

[srinivasa_maruvada]

It is usually not called as Cash Discount rather you can call it as Business or Turnover Dsicount something like that.

Cash discount is usually the discount received immedately at the time of purchase.

Create a new GL Account "Cash Discount Received Post Crossing Purchases from Vendor" with out post automatically check box. Go to F-02 and Dr Vendor and Credit above GL.

[Former Member]

Hi,

Thanks to all for your efforts. Before implementing SAP, in the legacy system the client used to post a JE as

Bank Clearing account.......Dr

To Cash discount Received ....Cr

So they were expecting the same from SAP also. They do not require any reference about from which vendor they have received the discount. we have now suggested them that they should follow the procedure as suggested by Suma Mani in her post above else we suggested they can do it in the same way as in legacy system by posting it through FB50.(In any case we require to remove the post automatically check box for the GL account)

Thanks.

Pritesh.