USA Off-Invoice Deductions Taken By Customer


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We manufacture and sell consumer products to several large retail chains which have rigid compliance requirements for submitting invoicing, packing, and shipping; and they take "off-invoice deductions" from payment of our invoices for any "non-compliance" issues (examples: an invoice is mailed/emailed not submitted via EDI = $50 penalty; a shipment is delivered early = $100 penalty; packing list indicates a different quantity than the order or perhaps the actual quantity received = $100 penalty, etc). Should these non-compliance deductions our customers take off from payment of our invoices be recorded as a sales allowance, expense, or a cost of goods sold?
 
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DTA93433

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I'd book these costs as part of Cost of Goods Sold and definitely put them in a separate G/L account to keep track of them. I would only use a sales (returns)/allowances for actual goods returned.
 

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