Question

Cash Purchase Rs.1,60,000 at 10% T.D. and 5% C.D. The amount of Net Purchases is. -----------

Answer 1

Explanation:

Cash purchase:- 1,60,000

Trade Discount:- 16,000

Cash Discount:- 7200

Thus the net perchase amount will be

1,60,000-16,000-7200

1,36,800

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Answer 2

The amount of net purchases is ₹1,36,800

Explanation:

• T.D. (trade discount) is given to resellers on the listed price for buying goods in bulk and is based on the size of the purchase.
• C.D. (cash discount) is given to the customers as an incentive for immediate payment and is given on the invoice price.
• Trade discount 10% = cash purchases * 10%

                                          = 1,60,000 * 10% = ₹16,000

• Cash discount 5% = (cash purchases - trade discount 10%) * 5%

                                       = (1,60,000 - 16,000) * 5%

                                       = ₹7,200

• Net purchases = total cash purchases - trade discount 10% - cash discount 5%

                                  = 1,60,000 - 16,000 - 7,200

                                  = ₹1,36,800