Question

Journal entry for paid to sangam by cheque and received discount

Answer 1

Answer:

50% discount .........

Answer 2

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Journal entries are adjustment entries. They do not involve cash or bank transactions. If the transaction involves cash, it is entered in the cash book. And, if it involves cheque, draft, electronic transfer or any other mode of bank payment, it is entered in the bank book.

The journal entry should have been passed when the goods or services were sold. That time the amount should have been debited to the party to which it was sold and credited to the product or service headline.

The entry you are asking for should go to the bank book. In this entry, you will debit the bank with the amount of the cheque which is 90% of the amount and debit discount account with the 10% amount and credit the party with the full amount.

The net effect of these two entries is this: The debit of 100% amount to the party’s account through the journal entry and credit of 100% amount through bank book will cancel out the party’s account in the ledger showing nil balance. That will leave 100% value to the credit of the product or service account in the ledger and 10% value of the product under discount account on the debit side. The balance 90% payment, which is the actual payment received, will show up to the debit of the bank account in the ledger.