Discounts increase total income???

I'm using QuickBooks Pro 2006 (Canadian Edition). I've just got to do my GST and found out a rather strange thing.

From time to time I give my clients (service business) discounts. I've created a special item 'discounts' and once I enter in on my invoice, the amount becomes negative.

I've created a GST detailed report and was trying to find out discrepancies between the income for GST purposes and my total income. I've noticed that some of my discounts that I have given to my clients appear on this report as negative numbers; others, as positive numbers. Because all net amount (income received from clients) appear on this report as negative numbers, then the discounts given should appear as positive numbers-well, some do, others don't.

I've just created a fake invoice for $10,000 and also entered a discount in the same amount, $10,000. Total sales amount in this report went up by $20,000 (so, the original income and the discount were added up). However, some other discounts do appear correctly, i.e., positive numbers (and they reduce the total income). It makes no sense whatsoever!

I'd really appreciated any comments.

Thanks,

Jack

Reply to
Jack
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You have bad items in your item list for some/all of the discounts. They are pointing to the wrong accounts on your chart of accounts. Have a talk with your CPA before you do more damage.

Also realize if you sell and item for $10,001 and give a $10,000 discount, the tax man wants tax on the "real sales price" of $10,001. Of course your P&L shows only $1 in revenue.

Reply to
Golden California Girls

???

Reply to
HeyBub

Hello,

I appreciate your reply.

I've checked my chart of accounts. The item 'discounts' is assigned to the following account: Income: Discounts. The GST code is automatically assigned to this discount. When I went to the Chart of Accounts and clicked on "Income: Discounts", creating an Account Quick Report for the previous fiscal year, I could see all the discounts (all eleven of them) given over that year; all of them were (correctly) negative values. So, I guess everything is OK here.

The problem is that when I create a GST Detail report (detailing all taxable income for the fiscal year), the report does include all the 11 discounts; however, four of those amounts are positive and the 8 are negative. I've checked and rechecked all the invoices in question and cannot find any differences: each invoice has the same item name ("discount") and each discount on each invoice is a negative value.

My point is-if all the values were consistently incorrect (i.e., positive) on the GST Detail report, then I'd know there is a problem with the wrong account on my chart of accounts. But what strikes me is the fact that SOME are positive and SOME are negative. Beats me!!!

Regarding charging tax on the full price-I know sometimes it must be done, but not in my business, so it's not an issue.

I'd again appreciate if anyone has any ideas as to what can cause this strange problem.

Thanks,

Jack

Reply to
Jack

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