Question

Purchased goods for cash rs 10000 at 5% trade discount

Answer 1

This transaction affects two accounts

Purchase account(goods are Purchased) and cash account (Purchased for cash)

Trade Discount is not shown in the books of accounts unlike cash discount..it is deducted from the fbooks of accounts and the net value is considered to be the historical price of such product or service

So 10000 - 5% = 9500 is the purchase amount

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

purchase account is a nominal (expenses) ; it should be credited

cash account is a Real account(reciever) ; it should be debited.

[all assets and Liabilities come under Real account; cash is an asset]

the Journal Entry will be..

purchase a/c Dr 9500

To cash a/c. 9500

(Being Goods Purchased for cash)