Question

Ms vaish traders ,delhi purchased 500 parker pens @rs200 each less trade discount @15% from luxor pens ltd. Delhi cgst and sgst was lived @6% each. Further cash discount was allwed @ 5% as the payment was made within specified time. What will be the amount of cash discount and trade discount?

Answer 1

The amount of Trade Discount is Rs. 15000/-
The amount of Cash Discount is Rs. 4250/-

Answer 2

Trade discount is not recorded in the books of accounts...It is deducted at the time of Purchase and the net amount will become the historical price of the Purchase..

So Given Purchases = 500@200 = 100000

Trade discount= 15%

Trade discount amount= 100000@15% =15000

Final Purchase price will be 100000 - 15000 = 85000

The Journal Entry will be -

[If the taxes are collected before discount]

Purchases a/c Dr 85000

Input Cgst a/c Dr 5100

Input sgst a/c Dr 5100

To cash a/c 90950

To discount recieved a/c 4250

( Being inter state sales made)

[If the taxes are collected after Discount]

Purchases a/c Dr 80650

Input cgst a/c Dr 4839

Input sgst a/c. Dr 4839

To cash a/c 86078

To discount recieved a/c 4250

(Being inter state sales made)

So
Trade Discount = 15000
Cash Discount = 4250