Question

Paid to gopal in full settelement of his account after deducting 5%discount

Answer 1

Explanation:

total Amount payable= 10000

Discount recieved = 5%

actually paid

10000 - 5% = 9500

so Discount recieved= 10000 - 9500 = 500..its a gain to us....

The transaction affects three accounts... gopal account (we owe money) , Cash a/c(paid 9500 ) , Discount recieved a/c( recieved 5% Discount;500 )..

gopal 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..

gopal 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...

Gopal Dr 10000

To Discount recieved a/c 500

To cash a/c. 9500

(Being amount due to Gopal settled )