Q. Which of the following entries is correct in respect of reserve for discounts on accounts payable?
a. Debit P&L A/c and Credit Reserve for Discount on Accounts Payable A/c
b. Debit Accounts Payable A/c and Credit P&L A/c
c. Debit Reserve for Discount on Accounts Payable A/c and Credit P&L A/c
d. Debit Reserve for Discount on Accounts Payable A/c and credit Accounts Payable A/c
The entry will be as follows:
Reserve for Discount on Creditors A/c……………………………………………… Dr.
To Profit & Loss A/c
It will be shown on the credit side as a separate item and will be shown on the Liabilities side by way of deduction from the Sundry Creditors.
