Question

Paid to jayashree to Rs 14300 in full settlement of Rs 14500

Answer 1

Jayashree Dr. 14500

....To Discount A/c.... 14,300

......To Cash A/c........... 200


[ being paid to jayashree at discount.]


In above journal entry,

Cash is paid to jayashree at a discount. Hence both are credited to business and To whom this amt is paid and discount given by the business is debited for business..

Answer 2

total Amount paid= 14300

actually payable= 14500

so Discount recieved= 14500 - 14300 = 200

The transaction affects three accounts... Jayashree account (we owe money) , Cash a/c(paid 14300) , Discount recieved a/c( 200 recieved )..

Jayashree 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..

Jayashree 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...

Jayashree Dr 14500

To Discount recieved a/c 200

To cash a/c. 14300

(Being amount due to Jayashree settled )