catalogue price = 5,00,000 , trade discount = 10% , cash discount = 20% If payment is made within 8 days. Buyer paid half the amount on 8th day and remain half on 10th day solve this problem.
Answers
Answer:
Given" Purchased goods from dinesh worth rupees 50000.,10%trade discount and 5%cash discount.Half of the amount paid to him immidiately journal entry"
This transaction affects four accounts.. Purchases account (Goods are Purchased) ,Dinesh account (purchased from Dinesh), Cash account (half of the amount is paid in cash), cash Discount recieved (Discount being received)
Trade Discount is not recorded in the books of accounts unlike cash Discount..it is deducted from the List price and net price is considered to be the historical price of that product...
Trade Discount rate = 10%
List Price= 50000
Trade Discount amount = 50000 × 10% = 5000
Actual Price= List price - Trade Discount amount
= 50000 - 5000 = 45000
out of 45000.. 22500 is paid out in cash and rest on credit...
cash Discount= 5%
Cash Discount amount= 22500 × 5% = 1125
Actual cash receivable = 22500
But since cash Discount is recieved.. actual cash will be 21375
The Three golden rules of accounting are
Personal account - Debit the receiver credit the giver
Nominal account - Debit All expenses and losses credit All incomes and gains
Real Account - Debit what comes in ,credit what goes out
segregating accounts: -
Real accounts..all assets and Liabilities come under it
Nominal accounts...all incomes gains losses expenses come under it
Personal account..as the Name suggests..
Cash is Going out..it should be credited.
cash Discount recieved is a gain..it should be credited..
purchases is an expense it should be debited..
Dinesh is the giver..he should be credited..
So the Journal Entry will be.....
Purchases a/c Dr 45000
To Cash a/c 21375
To Discount recieved a/c 1125
To Dinesh a/c 22500
(Being Goods Purchased from Dinesh)
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Answer:
entry for payment within 8 days:----
creditors a/c Dr 225000
To cash A/C 180000
To Discount a/c 45000
entry for payment within 10 days:-------
Creditors a/c Dr 225000
To Cash a/c 225000
Explanation:
amount od catalogue 500000
less: trade discount (50000)
450000
trade discount is not shown in the books of account because it is the means of advertisment while cash discount is recorded in the account within its limit.