Question

Purchased goods from Amar Rs. 3,00,000 at a trade discount of 10% and cash discount of 2%. Only 70% amount paid by cheque.​

Answer 1

Calculation of trade discount :-

Price = Rs. 3,00,000

Trade discount = 10% of 3,00,000 = Rs. 30,000

New price = Rs. 3,00,000 - Rs. 30,000

New price = Rs. 2,70,000

Calculation of cash discount :-

Since only 70% of the amount is paid by cheque, cash discount is only applicable on 70% amount. Cash discount is only calculated at the amount which is paid immediately when the transaction takes place.

70% of Rs. 2,70,000 = Rs. 1,89,000

Cash discount = 2% of Rs. 1,89,000 = Rs. 3,780

Amount paid and amount liable :-

Cash paid by cheque = 1,89,000 - 3,780

Cash paid by cheque = 1,85,220

We are liable to pay, = 2,70,000 - 1,89,000

We are liable to pay, = 81,000

Journal entry :-

Purchase A/c . . . Dr - 2,70,000

• To bank A/c - 1,85,220
• To discount Received A/c - 3,780
• To Amar - 81,000

( Being goods purchased and only 70% amount paid by cheque and discount received )