Question

Journalise the following transactions :- 2018 Jan 1 Bought goods of invoice price Rs. 10,000 from Abhay at 10% T.D. and 5% C.D. Jan 15 Withdrew goods for personal use Rs. 1000 and cash Rs. 2000.


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Answer 1

Given transactions:-

• Jan 1, 2018 : Bought goods of invoice price Rs. 10,000 from Abhay at 10% T.D. and 5% C.D
• Jan 15, 2018 : Withdrew goods for personal use Rs. 1000 and cash Rs. 2000

Required Journal Entries:

Transaction 1:

Jan 1, 2018

Purchase A/c . . . Dr - 9,000

• To discount allowed A/c - 450
• To cash A/c - 8,550

Narration:

Being goods purchased and discount received

Calculation of discount:

Price = 10,000

Less : Trade discount @ 10% = 10,000 - 1,000 = 9,000

Less : Cash discount @ 5% = 9,000 - 450 = 8,550

Therefore, the amount to be payed is 8,550

Since the cash discount is given and we know that cash discount is only allowed on cash transactions, therefore the goods purchased from Abhay is a cash transaction.

Note: We don't show trade discount in the books of account.

Transaction 2:

Jan 15, 2018

Drawings A/c . . . Dr - 3,000

• To cash A/c - 2,000
• To purchase A/c - 1,000

Narration:

( Being goods and cash withdrawn for personal use )