Question

Purchase goods worth rs 16000 less 20% treade discount and supplied them to ramesh and co, at list price less 10% trade discount

Answer 1

ANSWER

Discount are two types , trade discount and cash discount. 

Trade discount is allowed on the list price hence amount of trade discount is not reflected in books of account. 

Net price i.e. after deducting trade discount is only recorded in the books of account. 

Purchase Price                Rs.10000

Less: Trade Discount       Rs.500

Net Purchase Price         Rs.9500

Hence, Purchase account will be debited by Rs.9500.

Answer 2

Answer:

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