Question

bought goods of the list price rupees 6000 from khanna bros less 15% trade disc and 2%cash disc and paid 40% price at same time

Answer 1

List price = Rs.6000

Trade discount = 15%(6000) =Rs.900

Invoice price = Rs.6000- Rs.900 = Rs.5100

Immediate cash payment = 40%(5100) = Rs.2040

Cash discount = 2%( 2040) = Rs.41

Cash paid = Rs.2040 - Rs.41 = Rs 1999

Journal Entry

Purchases A/C. Dr. Rs.5100

To Cash Discount Rs.41

To Cash A/C. Rs.1999

To Khanna A/C. Rs.3060

(Being goods purchased from Khanna)

Answer 2

Answer:

The entry is given below for the problem

Explanation:

• Trade discount= List price x trade discount

Trade discount= 6000x 15/100

Trade discount=900

• Net amount/purchase rate = List price - trade discount

          Net amount/purchase rate = 6000 - 900

           Net amount/ purchase rate = 5100

• ( use cash discount formula. But since the question have both trade discount and cash discount, instead of using the actual list price on cash discount we will have to take the purchase rate which we got while calculating trade discount.)
• Cash discount = purchase rate x cash discount
• Net amount = purchase rate - cash discount

$\text { List price given is } & \text { Rs. } 6,000 \\\text { Less: Trade Discount (15\%) } & -\left(\frac{\text { Rs. } 900}{}\right) \\\text { Price after trade discount } & \text { Rs. } 5,100 \\\text { Less: Cash Discount (2\%) } & \left.-\frac{(\text { Rs. } 102}{}\right) \\\text { Net Payable } & \text { Rs. } 4998$

$&\text { Entry to be passed: }\\\text { Purchases A/c } & \text { Dr. } & \text { Rs.5,100 } \\\text { To Discount Received A/c } & \text { Rs. } 102 \\\text { To Bank A/c } & \text { Rs.4,998 }$

Final Sale Price $= 4998 - \frac{40* 4998}{100} \\=4998-1999.2\\=2999.8$

$= 4998 - 1999.2$

$= 2998.8$

So, following entry will be passed.

Purchase Account Dr. 5100

Cash Account Cr. 1999.20

Khanna Br. (Creditor)  Account Cr. 3060

Discount Received Account Cr. 40.8