Question

Purchased goods list price of 80,000 @ 10% trade discount and 2% cash discount 25% of amount paid immediately. The amount posted to cash account will be _________
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Answer 1

Answer:

Purchases A/C. Dr. Rs. 72,000

To Cash Discount A/C. Rs.1,800

To Cash A/C. Rs.70,200

(Being goods purchased for cash)

Explanation:

As per Golden rule of Accounting.

Debit, the receiver (the person who received the amount is to be debited)

Credit, the giver (the person who give the amount is to be credited)

In this case, Sanjay is belong to business transaction, Rahul has not any link with business transaction.

Amount received by Rahul in place of Sanjay.

This amount is belong to Sanjay.

So business will debited to Sanjay because Sanjay is a receiver and the person who is receiver is to be debited as per golden rule of Accounting.

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