Question

Goods cost to virat 20000 at a profit 20%on sale 10%trade discount

Answer 1

3 golden rules

• debit the receiver , credit the giver

• debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

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reason for debit and credit

sales A/c - Nominal A/c , its a income to the company therefore its credited

Virat A/c - personal A/c , where the debtor is receiver of goods therefore its debited .

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Calculation of sales

cost =20000

sales =20000+(20000*20%)

=20000+4000

=24000

net sales = sales - trade discount

= 24000-(24000*10%)

=24000-2400

=21600

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Journal entry

Virat A/c Dr 21600

To Sales A/c 21600

(Being credit sales made )

note : trade discount should be deducted from sales amount .

no journal entry passed for trade discount