Question

Drew cheque for H.james ₹240, allowed ₹5 as discount. what is the journal entry of this transaction?

Answer 1

H. James - - - - dr 245
To bank A/c 240
To discount received A/c 5
( being cheque drew for James)

Answer 2

H. James A/c Dr 245

To bank A/c 240

To discount received A/c 5

( being cheque drew for James)

Explanation:

In the given question the firm is being given cheque from H James of rupees 240 and allowed 5 rupees a discount. Here James is giving us 245 rupees and allowing a discount making the entire charge 245. Since James is a liability and liability is created we will David James as per the golden rule of accounting.

We will also get the bank account and the discount received account by rupees 245 and rupees 5 respectively.

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