Explanation

When discount is allowed, the accounting entry is: Debit Discount Allowed account and Credit Debtor account. The question asks which account is credited.

Discount allowed is a reduction given to customers for prompt payment. When a customer pays early and receives a discount, two things happen: they pay less cash, and we reduce what they owe us.

The debtor account is credited because the customer now owes less money. If a customer owed ₦100 and paid ₦95 with a ₦5 discount, the debtor account is credited with ₦100 (cleared) – ₦95 goes to cash received and ₦5 to discount allowed.

Discount allowed is debited because it is an expense (we are giving up revenue). Creditor accounts are used when we receive discounts from our suppliers, not when we give discounts to customers. Suspense is not involved in normal discount transactions.