X34 (1) The Discount columns are not to be balanced. This is so because the total of the debit side discount columns represents total discount allowed whereas the total of the credit side discount column represents the total discount received. (2) Discount columns do not serve the purpose of Discount Account because they are only the memorandum columns. A discount account will be opened in the ledger and the total of these columns will be posted therein. (3) The rules for recording discounts allowed and received in the personal accounts are: (a) Debit the creditor's account with the amount of discount received while debiting his account with the amount of cash paid, and (b) Credit the debtor's account with the amount of discount allowed together with cash received from him. (4) The total of the discount column appearing in the debit side of the Cash Book will be posted on the debit side of the Discount Allowed Account and the total of the discount column appearing on the credit side of the Cash Book will be posted on the credit side of the Discount Received Account in the ledger. This is at first sight appears to be incorrect. How can a debit total be transferred to the debit of an account? Here one must look at the entries for discounts in the personal account. Discount allowed have been entered in the credit of the individual personal accounts. The entry of the total in the expense account of discount allowed must, therefore, be on the debit side to preserve double entry balancing. The converse applies to discounts received. The sides on which the two types of discounts are entered in the discount accounts in the ledger can be easily reconciled if discounts allowed are seen as an expense of attracting money. As an expense they will be found as a debit in the discount allowed account. Similarly discounts received may be seen as income received for prompt payment of account, and as income will, therefore, appear on the credit side in the discounts received account. (5) Discount account being a nominal account, the following rule should be applied while recording discounts Debit all losses and expenses (Discount allowed) Credit all gains and incomes (Discount Received) Illustration 6. You are requested to prepare double column (Cash and Discount Columns) Cash Book of M/s Suresh Kumar and Company 1993 Rs. Jully 1 Opening balance of cash in hand 9000 5 Received from Nirmal 7805 Allowed him discount 20 9 Paid to Nasir 560 He allowed us discount 40 13 Sold goods for cash 200 17 Purchased goods for cash 520 78 21 25 29 Paid for Electricity Paid for Advertisement Received from Umeshwar Allowed him discount Paid Rent Paid Salaries 22 947 53 250 450 31