Question

Page
Received a cheque from Smart Enterprise
for Rs. 6.800 in full settlement of his account
RS 7000​

Answer 1

Journal Entry :

Cash A/c. dr 6800

Discount Allowed A/c dr 200

To Small Enterprise A/c 7000

{ Being Cash received from the small enterprise with discount of rs 200 }

Note

Very Easy to make Journal entry :

ACCOUNTING RULES

REAL ACCOUNT :

DR . WHAT COMES IN

CR. WHAT GOES OUT

PERSONAL ACCOUNT

DR. THE RECEIVER

CR. THE GIVER

NOMINAL ACCOUNT

DR ALL EXPENSES AND LOSSES

CR ALL INCOMES AND GAINS

_________________________________

So its is Real ACCOUNT rule as talk about cash .

so Acc to Rule , Cash and discount comes in from small enterprise ....

Discount Allowed in entry because of Full settlement as Cash expect to comes in business rs 7000 but received 6800 with full settlement ( refers the discount given by business hence expense , which is always record on dr side ,hence debited )

If any case full settlement not given then It means 200 is in arrears So it must to have full settlement in entry for showing Discount entry.

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