Question

Paid cash to amit rs9500 who allowed us discount of rs100

Answer 1

The transaction affects three accounts... Amit account (we owe money) , Cash a/c(paid 9500 ) , Discount recieved a/c( recieved 100 Discount )..

Amit account is a Personal account (as the name suggests)

cash account is a Real account (All the assets and Liabilities come under Real account; cash is an asset)

Discount Recieved is a nominal account (All expenses incomes gains losses come under nominal account and Discount recieved is a gain)


The Three golden rules of accounting are..

Personal account - Debit the receiver credit the giver..

Nominal account - Debit All expenses and losses, credit All incomes and gains

Real account - Debit what comes in ,credit what goes out.

in contention with the above rules..

Amit should be debited (he is the receiver)

Discount Recieved hould be debited (its a gain)

Cash should be credited (it is going out).


So the journal Entry will be...

Amit Dr 9600

To Discount recieved a/c 100

To cash a/c. 9500

(Being amount due to amit settled )