It'd be worthwhile to identify each effect the transactions make on the accounting equation. The $1396 should have decreased assets (cash) by $1396 and liabilities (creditors control) by $1396, while the discount would decrease liabilities (creditors control) by $154 and increase revenue (discount revenue) by $154. Overall, assets should have decreased by $1396, liabilities should have decreased by $1550 and OE increase by $154.
The incorrect recording would increase assets (cash) by $1396 and decrease assets (debtors control) by $1396 and the discount would decrease assets (debtors control) by $154 and increase expenses (discount expense) by $154. Overall, assets have decreased by $154 and OE decrease by $154.
So assets are overstated by $1242, liabilities are overstated by $1550 and OE understated by $308
I haven't done accounting in quite a while btw!!