Question

Paid to mahesh discount received from him @1.5% on total sum due 9850

Answer 1

given " Paid to mahesh discount received from him @1.5% on total sum due 9850"

total Amount paid= 9850

Discount recieved = 1.5%

actually payable=

x - x×1.5 % = 9850

x= 10000

so Discount recieved= 10000 - 9850 = 150..its a gain to us....

The transaction affects three accounts... mahesh account (we owe money) , Cash a/c(paid 9850 ) , Discount recieved a/c( recieved 1.5% Discount )..

Mahesh 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..

Mahesh 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...

Mahesh Dr 10000

To Discount recieved a/c 150

To cash a/c. 9850

(Being amount due to mahesh settled )