What is creditors allowance journal
?
submitted by charlotte

J. Schrute

It's a journal entry that documents an allowance, or reduction, in the amount owed to a creditor.

This typically occurs when a business agrees to a discount on one of your payments. It can also happen when you need to returns goods. Whatever the reason, it's used when the amount you owe the creditor decreases.

The creditors allowance journal involves debiting the creditor's account and crediting an allowance or discount account.

Rob Stilton

That is a record made when a company reduces what it owes to a supplier or creditor. For example, if the company returns some goods or gets a discount, this journal helps keep track of the new, lower amount due.

Rob Stilton

A creditors allowance is the amount they reduce your payment by. So, a creditors allowance journal is where you track it.

It's like a note in the books that shows how much less your company has to pay a creditor because of a discount or return. It helps keep everything accurate when you need to make an adjustment to a purchase or payment.