Transactions including trade and cash discounts, disposal of non-current assets, irrecoverable debts, contra entries
Some transactions need special double entry treatment. These include discounts given to customers, selling or scrapping old assets, writing off debts that will never be paid, and cancelling amounts owed between the same two parties.
Formula
Irrecoverable debt: Dr Irrecoverable Debts / Cr Receivables | Contra: Dr Payables / Cr Receivables
Real World
When Carillion collapsed in 2018, thousands of suppliers had to write off irrecoverable debts because Carillion could no longer pay what it owed them.
Exam Focus
Trade discount is never recorded — always calculate the invoiced amount after deducting it before writing any journal entry.
Essay Framework
Use PEEL to structure every paragraph. Tap each step for guidance and an example.
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