Question

It we receive ₹ 4,900 from our debtors in full settlement of a debt of ₹ 5,000, what will be the accounting effect of₹ 100?
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Answer 1

Answer:

Okay, so as we know Mr Raj is creditor to the firm,his account would have been showing credit balance ₹5000.

This may be the initial entry:-

Purchase a/c Dr. ₹5000

To Raj a/c ₹5000

(Being goods purchased from Raj worth ₹5000)

And, now it is fully settled at discount of ₹50.

So entry will be:-

Raj a/c Dr. ₹5000

To Cash/Bank a/c ₹4950

To Discount received a/c ₹50

( Being Raj paid ₹4950 as full settlement of his account)

Hope it helped..

Thanks.