There are three places to set up the default discount G/L accounts that are used by Purchase Invoices and/or the Pay Bills utility.
Edit the Location at Accounting / Setup / Locations, and, on the G/L Posting tab, select the A/P Discount account that should be used for this particular Location. This account will be used as the Location default A/P Discount account for managing discounts coming from purchase invoicing or from A/P Bills provided there is not a Default Expense Account ID assigned to the Vendor. The Location’s default A/P Discount G/L account can be manually overridden from the Terms window in Add/Edit Bills. If the discounts are taken on the A/P / Pay Bills window, any differences will remain in the A/P Discount account.
Note: This account should be assigned appropriately based on whether the company is set to transactional posting and whether discounts are included in Cost of Goods Sold on Purchase Invoices.
The Vendor has a Default Expense Account ID that can optionally be set on the 1099 / Payment Info tab of the Vendor file. If there is a default entered here, this G/L account is what defaults in Add/Edit Bills when a term is selected instead of the Location’s default A/P Discount G/L account. The Vendor’s Default Expense Account ID overrides the Location’s default A/P Discount G/L account. The G/L account can be manually overridden from the Terms window in Add/Edit Bills.
At A/P / Add/Edit Bills window, select the Terms button, where they can override the Discount G/L account from this window.
Edit an Inventory Department at Accounting / Setup / Inventory Departments, and, on the G/L Posting tab, select a Purchase Discount G/L account.
Note: This account should be assigned appropriately based on whether the company is set to transactional posting and whether discounts are included in Cost of Goods Sold on Purchase Invoices.
Select to use transactional posting on the General tab at Accounting / Setup / Preferences.
Scenario 1
On the Add/Edit Bills window, an A/P Bill is entered and posted to an expense account with a term that includes a discount (non-inventory).
On the Pay Bills window, an A/P Bill is paid and a discount is taken. The discount may be taken with the full amount of the discount, taken with a partial amount of the discount, or taken with none of the discount.
Result
If the Vendor record has a Default Expense Account ID and a default term or if a payment term is added to the A/P Bill while in Add/Edit Bills, the Discount G/L account on the A/P Bill defaults to the Default Expense Account ID from the Vendor record.
If the Vendor record does not have a Default Expense Account ID set but a default term is set up on the record or if a payment term has been added to the A/P Bill while in Add/Edit Bills, the Discount G/L account on the A/P Bill defaults to the A/P Discount G/L account from Setup / Locations.
Note: Any default Discount G/L account can be overridden from within the Terms window at Add/Edit Bill.
The posting from Pay Bills updates the Discount G/L account with the amount of the discount taken while the amount posted to the Cash in Bank G/L account is reduced by the amount of that discount.
Scenario 2
On the Add/Edit Bills window, an A/P Bill is entered and posted to an expense account without a discounted term (non-inventory).
On the Pay Bills window, an A/P Bill is paid and a discount is added even though there was not a discounted term on the A/P Bill itself.
Result
There is no posting to the Discount G/L account from the A/P Bill.
The posting from Pay Bills updates the Discount G/L account with the amount of the discount taken while the amount posted to the Cash in Bank G/L account is reduced by the amount of that discount.
If the Vendor has a Default Expense Account ID set on the Vendor record, that account is used as the Discount G/L account for the discount amount entered in Pay Bills.
If the Vendor does not have a Default Expense Account ID set on the vendor record, the Location A/P Discount G/L account is used as the Discount G/L account for the discount amount entered in Pay Bills.
Scenario 3
On the Pay Bills window, an A/P Bill was entered via purchase invoicing with a discount that was fully used.
Result
Regardless of whether a Default Expense Account ID is set on the Vendor record, when a payment term is added or one already exists from the Vendor record, the Discount G/L account on the resulting A/P Bill defaults to the A/P Discount G/L account from Setup / Locations.
In addition to updating the Accounts Payable G/L account for the payment amount plus the discount amount taken, the posting from purchase invoicing updates the A/P Discount G/L account with the offset to the Purchase Discount G/L account from the Inventory Department for the total amount of the discount. When the company is set to use transactional posting, the Purchase Discount G/L account should generally be set to the same G/L account as the Inventory G/L account already set up on the Inventory Department, particularly when the preference to Include Discount in Cost of Inventory is selected on the Inventory Department Information window. To use transactional posting, navigate to the General tab at Accounting / Preferences, and select the Transactional Posting to Inventory Asset Accounts option.
The posting from Pay Bills updates the A/P Discount G/L account for the full discount amount while the amount posted to the Cash in Bank G/L account is reduced by the amount of that discount.
Scenario 4
On the Pay Bills window, a Bill was entered via purchase invoicing with a discount that was partially used.
Result
Regardless of whether a Default Expense Account ID is set on the Vendor record, when a payment term is added or one already exists from the Vendor record, the Discount G/L account on the resulting A/P Bill defaults to the A/P Discount G/L account from Setup / Locations.
The posting from purchase invoicing updates the A/P Discount G/L account with the offset to the Purchase Discount G/L account from the Inventory Department for the total amount of the discount. When the company is set to transactional posting, the Purchase Discount G/L account should generally be set to the same G/L account as the Inventory G/L account already set up on the Inventory Department, particularly when the preference to Include Discount in Cost of Inventory is selected on the Inventory Department Information window. To use transactional posting, navigate to the General tab at Accounting / Preferences, and select the Transactional Posting to Inventory Asset Accounts option.
In addition to updating the Accounts Payable G/L account for the payment amount plus the discount amount taken, the posting from Pay Bills updates the A/P Discount G/L account for the amount of the discount taken. The amount posted to the Cash in Bank G/L account is reduced by the amount of that discount.
Note: While the full amount of the discount has already been updated to the Purchase Discount G/L account from the Inventory Department for the total amount from purchase invoicing, this Pay Bills posting leaves any remaining discount amount sitting in the Location's A/P Discount G/L account.
Scenario 5
On the Pay Bills window, a Bill was entered via purchase invoicing with a discount that was not used.
Result
Regardless of whether a Default Expense Account ID is set on the Vendor record, when a payment term is added or one already exists from the Vendor record, the Discount G/L account on the resulting A/P Bill defaults to the A/P Discount G/L account from Setup / Locations.
The posting from purchase invoicing updates the A/P Discount G/L account with the offset to the Purchase Discount G/L account from the Inventory Department for the total amount of the discount. When the company is set to transactional posting, the Purchase Discount G/L account should generally be set to the same G/L account as the Inventory G/L account already set up on the Inventory Department, particularly when the preference to Include Discount in Cost of Inventory is checked on the Inventory Department Information window. To use transactional posting, navigate to the General tab at Accounting / Preferences, and select the Transactional Posting to Inventory Asset Accounts option.
In addition to updating the Accounts Payable G/L account for the payment amount, the posting from Pay Bills updates the Cash in Bank G/L account for the amount paid on the A/P Bill. It makes no update to the A/P Discount G/L account nor to the Purchase Discount G/L account.
Note: While the full amount of the discount has already been updated to the Purchase Discount G/L account from the Inventory Department for the total amount from purchase invoicing, this Pay Bills posting leaves any remaining discount amount sitting in the Location's A/P Discount G/L account.
Scenario 6
On the Pay Bills window, a Bill was entered via purchase invoicing without a discount that was then taken.
Result
Regardless of whether a Default Expense Account ID is set on the Vendor record, when a payment term is added or one already exists from the Vendor record, the Discount G/L account on the resulting A/P Bill, defaults to the A/P Discount G/L account from Setup / Locations.
The posting from purchase invoicing has no update to the A/P Discount G/L account nor to the Purchase Discount G/L account from the Inventory.
In addition to updating the Accounts Payable G/L account for the payment amount plus the discount amount taken, the posting from Pay Bills updates the A/P Discount G/L account for the amount of the discount taken. The amount posted to the Cash in Bank G/L account is reduced by the amount of that discount.
Note: While not normally advisable, because the Location and Inventory Department G/L accounts should already be set accurately, any default Discount G/L account can be overridden from within the Terms window on a Purchase Order, Purchase Invoice, or at Add/Edit Bills.
