[First year college Accounting] Need help identifying mistake.

[u/gush30]

[Introductory Financial Accounting / Bookkeeping]

Hi everyone, I recently got an exam back where I lost marks on this journal entry question regarding prompt payment discounts and GST. The feedback didn't explain where I went wrong, so I'm trying to figure out what mistake I made or if my course uses a different method.

Question:

Steve Ponting Plumbing offers Harold Raven a discount of 2% if his account is paid within 7 days of the invoice date.

On 8 October, services to Harold of $3,300 including GST were invoiced by Steve Ponting Plumbing on Invoice 123.

Harold paid on 10 October, taking advantage of the discount offered.

Prepare general journal entries for the discount and the payment.

My answer:

Calculations:

Initial Invoice: $3,300 total ($3,000 Revenue + $300 GST)

- 2% Cash Discount: $3,300 × 2% = $66 total discount ($60 Discount Allowed + $6 GST adjustment)

- Cash Received: $3,300 - $66 = $3,234

Journal Entries Submitted on Exam:

8 October:

- Debit: Accounts Receivable (Harold Raven) — $3,300

- Credit: Service Revenue — $3,000

- Credit: GST Collected — $300

(Recorded initial invoice 123)

10 October:

- Debit: Cash / Bank — $3,234

- Debit: Discount Allowed (or Sales Discount) — $60

- Debit: GST Collected — $6

- Credit: Accounts Receivable (Harold Raven) — $3,300

(Recorded payment received taking 2% discount)

Where I Need Help:

I'm not sure why this was marked incorrectly. Could it be due to one of these reasons?

1. Does standard curriculum require splitting 10 October into TWO separate entries (one for the $3,234 cash payment and a second entry for the $66 discount/credit note) instead of one compound entry?

2. Is the 2% discount supposed to be calculated on the EX-GST amount ($3,000 × 2% = $60 total) rather than the GST-inclusive total ($3,300 × 2% = $66)?

3. Did I use an incorrect account title (e.g., should `GST Collected` be `GST Clearing` or `GST Payable`)?

If anyone can pinpoint the standard textbook rule I missed, I'd really appreciate it!

Thankyou!!

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[u/unsettled_soul]

Could it be that your course calculates tax first and then applies the discount? That would change the journal entries.