Question

purchase goods of rs 500000,Trade discount @ 10%,cash discount @ 25%

Answer 1

First Step

Subtract the trade discount

500000*10/100 =50000 Rs

So, 500000-50000
=450000 Rs

Remember trade discount is never showed in the journal.

Second now subtract find the cash discount,

450000 *25/100=112500 Rs

Subtract it
450000 -112500 = 337500 Rs

Finally,

Purchase a/c Dr
450000
To cash a/c 337500
To discount received a/c 112500
(being goods purchased)

_______________

If you find any mistakes please report

_______________

#thanks

Answer 2

Hey there!

The trade discount is never shown in the journal because trade discount is not the actual discount granted by the seller it is the discount asked by the purchaser (bargain).

So, your journal entries are as follows

Purchase a/c Dr. 450000
To cash a/c 337500
To discount received a/c 112500
(being goods bought in cash discount)

Thank you!