Rebates Bookkeeping Question

Rebates

Rebates

If our company sells a solar system and the customer invoice is $2500.00, Then there is a rebate for $500.00.

The customer pays for $2000.00 and we recieve (5 months later) a rebate from either the panel manufacturer, or the government, a rebate for $500.00, how is it recorded?

Recognized as Revenue? Carried as a receivable? Discounted against the cost of material?

Is the customer billed for $2500 or $2000?

Comments for Rebates Bookkeeping Question

Average Rating starstarstarstarstar

Click here to add your own comments

Jan 20, 2024
Rating
starstarstarstarstar 		Bookkeeping for Rebates
by: BB

When dealing with a situation where a solar system is sold, and there's a rebate involved, here's how you can handle the accounting:

Customer Invoice for Solar System:

Initially, create an invoice for the full amount, which is $2500. The customer is billed for the full price.

Receiving Payment:

The customer pays $2000. Record this payment against the invoice.

Recording Rebate Received:

When you receive the $500 rebate from the manufacturer or government, record it as a separate income entry. This shouldn't be recognized as revenue but treated as a rebate or subsidy.

Adjusting Customer Invoice:

Adjust the customer's invoice by deducting the rebate amount. This means the customer is effectively billed $2000 ($2500 - $500).

Treatment of Rebate:

The rebate received can be recognized as income, but it's essential to categorize it correctly. You may create an account like "Rebates Income" to track such amounts.

Discount Against Cost of Material:

If the rebate is related to the cost of the solar system, you can also consider reducing the cost of goods sold (COGS) or adjusting the cost of materials.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Bookkeeping Questions and Answers.

Rebates

by Cynthia
(Johannesburg)

How do I balance my books if the supplier is not giving cash back for rebates but take it as payment for what he is owed?

Comments for Rebates

Average Rating starstarstarstarstar

Click here to add your own comments

Jan 20, 2024
Rating
starstarstarstarstar 		Applying Supplier Rebates
by: BB

When dealing with a situation where a supplier provides rebates that are adjusted against what is owed, here's how you can handle the accounting:

Initial Supplier Invoice:

Assume you have an initial invoice from the supplier for a certain amount.

Receiving Rebate:

When the supplier provides a rebate, treat this as a reduction in the amount owed rather than receiving cash.

Adjusting Accounts Payable:

Reduce the Accounts Payable (what you owe the supplier) by the amount of the rebate.

Recording the Rebate:

Create a separate entry to account for the rebate. This entry may go to an income account or a specific account for rebates received.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Bookkeeping Questions and Answers.


Please subscribe to my monthly newsletter, Bookkeeping Basics E-zine. It tells you every month about the new information that I have added, including some great tips and advice from myself and other Bookkeeping Basics readers.

Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Bookkeeping Basics E-Zine.

Like Bookkeeping-Basics.net?