When discount is allowed, the accounting entry is debit discount allowed account and credit ____ account

The correct accounting entry to credit when a discount is allowed is the debtor account.

Here's a simple explanation:

The "Discount Allowed" is a type of expense for a business which provides an incentive to customers to make payments promptly. Therefore, you need to record this as a reduction in the total receivables.

• Discount Allowed is recorded in the books of accounts as an expense, so you debit the "Discount Allowed" account.
• You credit the debtor account (the account of the customer), because by allowing a discount, the customer now owes you less money than originally recorded. This means the amount you have as receivables from the customer (debtor) decreases.

In summary, when a discount is allowed, the accounting entry is to debit the "Discount Allowed" account to reflect it as an expense, and credit the debtor account to reduce the outstanding amount owed by the customer.