Record the discount of receivables
Discounting means that a promissory note is handed over to a person or an institution by the holder of the promissory note before the due date, and the payment is found after deducting an amount as a discounting fee from the said person or institution.
The discount fee can be calculated as follows:
Discount cost = actual promissory amount x discount rate x discount period
The meaning of the discount period is the time interval between the discount date and the maturity date.
When we discount the promissory note with the bank, the bank withdraws an amount from our account as a discount fee and informs us through a debtor’s notice. Of course, when money is deposited into our account, the creditor will inform us through a notice.
Regarding the registration of promissory note discounting in the books, considering that when a promissory note is discounted with the bank, a possible debt is created for the discounter to the bank until the payment of the promissory note amount by the issuer of the promissory note to the bank, so it should not be done until the due date. Account receivables should be deleted. Therefore, the amount of the discounted promissory note will be registered with the bank in this time interval as a possible debt under the title of discounted receivables.
At the time of maturity, there are two modes:
A- Receipt of the downloaded promissory note
In this case; Accounts receivable discounted on the maturity date of the promissory note and when the amount of discounted promissory note is paid to the bank by the issuer of the promissory note, it becomes a debit and against the accounts receivable account, a creditor.
Downloaded receivable documents ×××××
Documents receivable ×××××
Discounted receivables are usually deducted from the receivables balance as a straw asset account in the balance sheet.
B- Defaulting on documents that have already been downloaded
If a discounted promissory note defaults on the due date by its issuer, it is necessary to pay the principal and interest of the promissory note to the bank or institution that performed the discounting process. Therefore, at the time of default of such documents, on the one hand, the promissory note issuer’s account (accounts receivable) is debited in the discounter’s books, and on the other hand, the accounts related to the documents receivable and the discounted receivable documents are debited in terms of the payment of the promissory note. It is closed to the bank. If the bank, due to the default of the promissory note, in addition to the principal amount and sub-promissory note amount, also receives an amount as a fee from the discounter of the promissory note or withdraws it from his current account, it is necessary to include the amount of the fee paid to the debtor in accounts receivable. from the issuer of the promissory note) so when a promissory note that has already been downloaded to the bank is defaulted, the following two records are issued in the books of the promissory note receiver:
Fee + actual amount of promissory note = amount withdrawn by the bank
1- H receivable ×××××
H Bank ×××××
2- Discounted receivable documents ×××
Documents receivable ×××
Financial Tax Group of Iran Consultants Authority
https://t.me/joinchat/GrQDqUnYpIMVfQ5R9pQ
This post is written by Arambnamkhda