Question

Purchase timber from Singh &co at the list price of 20000 allowed 10% trade discount

Answer 1

Okay , here Timber is purchased From Singh and co.at 20000 less 10% trade discount .

Let us first think of the accounts affected in this transaction:

Purchase account

Accounts payable (Singh & Co.)

Now This purchase is on trade discount , so amount will be 20000-10% of 20000 = 20000-2000= 18000

Last step : Which account will be debit and credit ?

To answer this question , we have to think on the rules of debit and credit.

Purchases are always debit , while increase in liabilities are credit .

So we have the following journal entry :

Purchase Dr              18000

Accounts payable                          18000

I hope it makes sense to you .