Chemcal rebates

Question

We are starting to get in chemical rebates for different products that were sold during the year - I want to post these rebates to the product that was given the rebate - what is the correct way to do this. Also when you get an early payment discount what is the correct way to post this to the product that the discount was given

Smith and Co · Accepted Answer

I would not post rebates against the product themselves. The common way is to create a revenue account called Suppliers' Rebate and post all rebates in there. On the income stmt it will show the rebate to come off of the revenue accounts. 
 Early payment discounts do not go against the products - create another revenue account for this one called Early Payment Discount and enter the discount amount in there. You can use this account for both the suppliers early pmt discount and for your customers who takes advantage of any early payment discount policy you may have. 
 Remember that the early payment discounts are only on subtotal BEFORE taxes and the original GST amount remains the same - in other words there is no GST applicable on discounts. 
 Example: 
 100.00 product 
 5.00 GST 
 105.00 Total 
 -2.00 = 2% early pmt discount based on 100.00 and no taxes to calculate on this amount. 
 103.00 = payment due.

Francesmary · Answer

I do have those accounts and use them but would like to get the correct margin on each of our products therefore it would be nice to beable to post to the product - otherwise I will have to figure margins out by spreadsheet

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