Pass Journal entries for the following transaction:
(i) Bought goods from mohan of the list price of 10,000 at 15% trade discount.
(ii) Settled the account of mohan by paying cash , under discount of 4%.
(iii) Bought goods for cash of the list price of 50,000 at 20 % trade discount and 5% cash discount.
(iv) Sold goods for cash of the list price of 20,000 at 10 % trade discount and 3 % cash discount.
Answers
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Answer:
(i) Purchases A/c....... Dr. ₹8500
To Mohan ₹8500
(Being goods purchased on credit, less trade discount of 15%)
(ii) Mohan......... Dr. ₹8500
To Discount received A/c ₹340
To Cash A/c ₹8160
(Payment made to Mohan, less 4% cash discount)
(iii) Purchases A/c..... Dr. ₹40000
To Discount received A/c ₹2000
To Cash A/c ₹38000
(Being goods purchased, less 20% trade discount and 5% cash discount)
(iv) Cash A/c....... Dr. ₹18430
Discount allowed A/c... Dr. ₹570
To Sales A/c ₹19000
(Being goods sold, less 10% trade discount and 3% cash discount)
Explanation:
Journal Entry:
A journal entry is an act of maintaining records of transactions, either economic or non-economic. Transactions are recorded in an accounting journal depicting a company's debit and credit balances. The journal entry can consist of numerous recordings and transactions, each of which is either debit or credit.
Solution:
(i) Purchases A/c....... Dr. ₹8500
To Mohan ₹8500
(Being goods purchased on credit, less trade discount of 15%)
(ii) Mohan......... Dr. ₹8500
To Discount received A/c ₹340
To Cash A/c ₹8160
(Payment made to Mohan, less 4% cash discount)
(iii) Purchases A/c..... Dr. ₹40000
To Discount received A/c ₹2000
To Cash A/c ₹38000
(Being goods purchased, less 20% trade discount and 5% cash discount)
(iv) Cash A/c....... Dr. ₹18430
Discount allowed A/c... Dr. ₹570
To Sales A/c ₹19000
(Being goods sold, less 10% trade discount and 3% cash discount)
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