Accounting for standard sales discounts according to the latest regulations

What is sales discount accounting?

Discount on sales price is a deduction for the buyer when the goods or services provided are of poor quality, loss of quality, improper specifications, defective or outdated, as stipulated in the sales contract. This is one of the factors that reduces revenue at businesses.

Accounting for sales discounts is the operation of recording discounts for buyers when goods are of poor quality, defective, out of specification or not in accordance with consumer tastes. This amount will be transferred to the sales revenue account to calculate net revenue during the business period

How to account for sales price reduction according to Circular 200/2014/TT-BTC

Principles for accounting for sales discounts for sellers

According to Clause 1d, Article 81 of Circular 200/2014/TT-BTC:

• If the VAT invoice or sales invoice has recorded a discount for the buyer, that is, the selling price on the invoice has been reduced, then the business (seller) does not need to use account 5213. Sales revenue will be recorded at reduced price (net revenue).
• This account is only used to reflect discounts approved after sales have been made and revenue recorded, and to issue discount invoices in addition to the original invoice due to poor quality or loss of goods. for similar reasons.

Sales discount account structure

The sales discount account is recorded in account 5213.

Debtor:

• Discount amount approved for the shopper.
• Revenue from sold goods has been returned to the buyer or deducted from accounts receivable from customers for the number of products and goods sold.

Party has:

• At the end of the accounting period, transfer the entire amount of sales discount to account 511 "Revenue from sales and service provision" to determine net revenue of the reporting period.

Account 521 – Revenue from sales and service provision has no ending balance.

How to account for sales price reduction according to Circular 200/2014/TT-BTC

Case 1 - Discount immediately upon sale

For sellers:

• When making an invoice: The price on the invoice is the reduced price.
• When accounting: Accountants record revenue according to the reduced price (net revenue) and do not record the discount separately.
• • Debit Account 111, 112, 131: Total payment amount
  • Credit Account 511: Net revenue (reduced)
  • Credit Account 3331: Output VAT (if any)

For buyers:

Record purchased goods as normal purchases (do not record discounts):

• If input tax is deductible:

• • Debit Account 152, 153, 156, ...: Purchase price excluding VAT
  • Debit Account 1331: Deductible VAT
  • Account 111, 112, 331,...: Total payment price.

• If input VAT is not deductible:
• • Debit Account 152, 153, 156, ...: Purchase price includes VAT
  • There are accounts 111, 112, 331,...: Total payment price.

Case 2 - Discount after sale

For sellers:

1. Invoicing: Once the business has issued the invoice and delivered the goods to the customer, if the goods are found to be of poor quality, both parties will make a confirmation record. The invoice will then be adjusted to reduce the unit price.

2. Accounting: When there is a document confirming a reduction in sales price due to poor quality goods, record:

• If goods are subject to VAT using the deduction method:
• • Debit Account 5213 – Sales price reduction (VAT exclusive price)
  • Debit Account 3331 – VAT payable (33311)
  • There are accounts 111, 112, 131...
• If the goods are not subject to VAT or subject to VAT by the direct method:

• • Debit Account 5213 – Sales price reduction
  • There are accounts 111, 112, 131...

3. Closing at the end of the period: Transfer the total discount on goods sold during the period to the account "Revenue from sales and service provision", record:

• Debit Account 511 – Revenue from sales and service provision
• Credit: Account 5213 – Sales price reduction

4. Note: If a price reduction occurs after the goods have been sold in the previous period but before the release of the financial statements, the accountant must adjust the previous period's revenue to decrease. If a price reduction occurs after the time the financial statements are issued, record a decrease in revenue of the period in which it occurs.

For buyers:

1. Accounting: The buyer, based on the quantity of discounted goods in stock, used or sold, records:

• Debit Account 111, 112, 331 – depending on whether the discount is in cash or debt is deducted
• Account 152, 153, 156, 621, 623, 627, 154, 241, 632... - depending on the purpose of purchase
• Credit Account 133 – VAT is deducted corresponding to the discount amount

Accounting for discounted goods according to Circular 133/2016/TT-BTC.

For sellers:

Circular 133 does not have revenue deduction accounts like "Sales discount" in Circular 200. Therefore, when a sales discount arises, the accountant will record it on the Debit side of account 511.

Specifically, the accountant will perform accounting according to the instructions of Circular 200 and replace Debit Account 5213 with Debit Account 511.

The accounting entries recorded are as follows:

• In case the goods have VAT:

• • Debit Account 511 – Sales price reduction (according to sales price without VAT)
  • Debit Account 3331 – VAT payable (33311) (VAT amount of goods sold must be discounted)
  • There are accounts 111, 112, 131...

• In case the goods do not have VAT:
• • Debit Account 511 – Sales price reduction
  • There are accounts 111, 112, 131...

For buyers: When receiving a discount on sales, the accountant will record it as follows:

• • Debit account 111, 112, 331
  • Account 152, 153, 156, 621, 623, 627, 154, 241, 632
  • Credit Account 133 – VAT is deducted corresponding to the reduced amount

Specific example of accounting for sales discounts

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