Question

a. Mr. Tiny purchased 10,000 Kgs of rice @Rs.50 per Kg net of Rs.2 per Kg of bulk purchase discount. He received a Cash discount of 2% on the cost. Journalise the above entry

Answer 1

Answer:

Purchase a/c debited(10000kg×48) 480000

to Cash account 470400

to Discount received account 9600

Explanation:

purchase is recorded at net of trading discount. Tradinf discount separate account is not opened.

for cash discount we open a separate account discount received account as it is received for early settlement of dues in cash after settlement of final price for goods

Discount received=480000×2%

Discount received=9600