Question

Jan.20 Sold goods to Ram of the list price of 1,25,000 less 20% Trade discount and 2% cash discount and paid 40% by cheque.


what will be the journal entry for this .​

Answer 1

Answer:

Particulars Dr. Amt. Cr. Amt.

Ram A/C Dr 58,800

Bank A/C Dr 40,000

Discount Allowed A/C Dr 1,200

To Sales A/C 1,00,000

Explanation:

First - Deduct 20% from the Total Amount (1,25,000), the amount then becomes 1,00,000.

Second - Deduct 40% from 1,00,000 as 40% is paid by cheque. The cheque amount then becomes 40,000. and the cash amount becomes 60,000.

Third - Deduct 2% from 60,000 as it is the cash discount. The Cash Discount Amount becomes 1,200. Subtract the Cash Discount Amount from Cash Amount. The Cash Amount then becomes 58,800.

Note - Only the Cheque is paid and the Cash is still not paid so, Ram becomes our Debtor.

The Accounts so formed after above 3 steps are :

Ram A/C (Debtor)

Bank A/C (Cheque Paid)

Discount Allowed A/C (Cash Discount)

Sales A/C (Sold Goods)

Final Step

Put these accounts on the Debit and Credit side (where they belong) and write the amounts and the journal entry is done.

Hope this helped. :)

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Answer 2

Answer:

A journal entry is used to record a business transaction in a company's accounting records. A journal entry is often recorded in the general ledger; however, it may also be entered in a subsidiary ledger before being summarised and rolled forward into the main ledger. The general ledger is then used to compile the financial statements for the firm.

Ram A/c ----------------- dr.   $100000$

        To sales A/C-----------cr              $100000$

(Being goods sold to ram at 20% trade discount)

Bank A/C ----------------dr     $39200$

Discount allowed A/C ------dr $800$

            To Ram A/c--------------------cr    $40000$

(Being 40% Payment received by cheque and discount allowed)

working notes-

• Amount of goods sold would be Rs$100000$ ($125000 - 20$‰×$125000$) and
• cash discount would be Rs $800$, cash discount would be calculated on amount received Rs $40000$ that is $40000 - 40000$×$2$‰

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