Question

Goods sold to Roma for ₹5000 and 20% trade discount 3% cash discount. Half of the payment was recieved immidiately

Answer 1

Answer:

Cash A/c Dr. 1940

Cash discount A/c Dr. 60

Roma's A/c Dr. 2000

To sales A/c 4000

( being goods sold to Roma )

Explanation:

trade discount = 20% of 5000 = 1000

trade discount is not recorded in the books of accounts.

cash discount is only allowed on the amount which is being paid in cash at the time of transition.

cash discount = 3 % of 2000 = 60

Answer 2

Answer:

Journal entry for Goods sold to Roma for ₹5000 at 20% trade and 3% cash discount with half of the payment received immediately will be:

Cash A/c.........                Dr.        ₹1940
Discount allowed A/c... Dr.        ₹60
Roma.....                          Dr.        ₹2000
          To Sales A/c                                         ₹4000
(Being goods sold to Roma less 20% trade and 3% cash discount; half of the payment received immediately)

Explanation:

Calculation:
Selling price of the goods= 5000-20%×5000
= 5000-1000
= ₹4000
∵ Roma pays half of the amount instantly, she avails cash discount of 3% on that amount, i.e., ₹2000 only.
∴ Cash discount availed= 3%×2000
= ₹60

∴ Journal Entry for this transaction would be:

Cash A/c.........                Dr.        ₹1940
Discount allowed A/c... Dr.        ₹60
Roma.....                          Dr.        ₹2000
          To Sales A/c                                         ₹4000
(Being goods sold to Roma less 20% trade and 3% cash discount; half of the payment received immediately)

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