The discount allowed by a seller to its customers at a fixed percentage on the listed price of goods is termed as Trade discount.
No separate entry is passed for the Trade discount, as it is deducted from the cash memo or invoice of the goods.
If the goods sold at trade discount are returned by the customer, the amount of trade discount is again deducted from the list price of the returned goods. Generally, it is allowed to the retailers to enable them to sell the goods to their customers at list price.