now we're going to learn how to record sales where we give discounts to customers in this
video we will learn about normal discounts these are discounts for common reasons not early pay
discounts early pay discount will be learned in the following video in this video when we say
normal discounts we mean the type of discounts that you're accustomed to hearing about such
as an employee discount or a preferred customer discount or even a discount for a seasonal sale
before you can record discounts that you offer your customers you have to setup your QuickBooks
file to be able to record those discounts step 1 you have to put an account in the chart of
accounts that will record the discounts that you offer to the customer each individual different
type of discount should have a separate account in your chart of accounts so you can track how
much money was offered or given as a discount for example if you offer employee discounts you should
have a separate account in the chart of accounts just to record all the employee discounts this way
you can look on your trial balance and know the total money that was given for employee discounts
if you offer a preferred customer discount you should have a separate account in your chart of
accounts just to record all of the discounts that were given to preferred customers the
second step for setting up discounts is to put an item on the items list for that discount each
different type of discount we offer should have a different item on the items list for
example we offer a $20 discount for preferred customers and this is issued at the discretion
of the salesperson well what do we have to do to our file to be able to offer this discount
well first we have to put an expense the chart of accounts called preferred customer discounts then
we have to put an item on the items list called preferred customer discounts from the main menu
click list chart of accounts in the bottom left click account new in the add new account window
choose expense type of account in accounting theory discounts to customers are not always
expenses however many companies put it this way for practical purposes click continue and you
notice expense is still chosen as the type click into the name field and type preferred customer
discounts make sure your cap locks is on so you can distinguish between accounts that we put and
the accounts that QuickBooks put when you click Save and close you can see we have a new account
in the chart of accounts under the category of expense preferred customer discount now let's
put the discount item on the items list from the main menu click list items list in the bottom left
click item new the account type for a discount item is discount the discount name is the same
as we discussed preferred customer discounts you have to type more characters than the field will
show but it will allow you to type preferred customer discounts now the amount is a flat
amount not a percent so we highlight the zeros and we type in the number 20 with no decimal
point and we push tab QuickBooks knows this is 20 dollars not 20 percent when we click the pull
down arrow for a count we are going to choose the discount account that we just recently put in the
chart of accounts when we click OK we now have a new item in the list called preferred customer
discounts now here is our first transaction where we offer the customer a discount on
March 1 Holden did 12 editing hours for candy on account and gave her the preferred customer
discount of $20 okay from the main menu click customers create invoice the date was March 1st
the customer was candy the quantity was I believe 12 12 yes and then the item was
editing now normally it would be $1,680 but on the second line we will click under the first
line and we will choose the item preferred customer discount notice $20 comes up as
a - because QuickBooks knows the discount item will be subtracted from the amount of
the invoice so instead of candy paying 1680 she will only pay 1660 and we will give her
a $20 discount when we click Save and close we can open the trial balance and we can see the
account called preferred customer discount shows up on the trial balance for the first time as $20