Question

Journalise= sold goods worth ₹20000@10%trade discount and @5%cash discount.

Answer 1

Explanation:

Trade discount will be ₹20,000 × 10% = ₹2000. This amount (₹2000) will be deducted from total purchase price i.e. ₹20,000 - ₹2000 = ₹18000

Cash discount is calculated on the cash amount paid i.e. after deducting trade discount from purchase price (20,000 - 2000). The cash paid is ₹18,000 and cash discount is ₹18,000 × 5% = ₹900

Journal entry is as follows :

Purchase a/c………….dr ₹18,000

To Cash a/c ₹17,100

To discount received a/c ₹900

Purchase is nominal a/c and expense so Debited

Cash is real a/c and goes out of business so Credited

Discount received is nominal a/c and gain so Credited

(Remember, trade discount is not recorded in books of accounts. Only cash discount is