Question

purchased from Arun goods for 10000 who allowed a Trade discount of 2%

Answer 1

Hello ur answer is
cost of purchase = 10000
t.d @2% = 10000×2/100
= 200
so final purchase price = 10000-200
= 9800
so journal entry will be=>
purchase a/c Dr 9800
to Arun

Hope it helps..☺

Answer 2

This transaction affects two accounts.. Purchases account (Goods are Purchased) ,arun account (purchased from arun)

Trade Discount is not recorded in the books of accounts unlike cash Discount..it is deducted from the List price and net price is considered to be the historical price of that product...

Trade Discount rate = 2%

List Price= 10000

Trade Discount amount = 10000 × 2% = 200

Actual Price= List price - Trade Discount amount

= 10000 - 200 = 9800 on credit...



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

segregating accounts: -

Real accounts..all assets and Liabilities come under it

Nominal accounts...all incomes gains losses expenses come under it

Personal account..as the Name suggests..


Cash is Going out..it should be credited.

cash Discount recieved is a gain..it should be credited..

purchases is an expense it should be debited..

arun is the giver..he should be credited..


So the Journal Entry will be.....

Purchases a/c Dr 9800

To arun a/c 9800

(Being Goods Purchased from arun)