Question

purchased goods of 100000 at 20% trade discount and 5% cash discount on purchase price.60% of the amount was paid immediately by cheque. Journal entry

Answer 1

Explanation:

Purchase A/c. Dr 80000

To Cash Discount A/c. 4000

To Bank A/c. 45600

To creditor A/c 30400

Answer 2

Journal entries in the books of purchaser

Purchase A/C DR   80,000

         To Cash Discount A/C   4,000

          To Cash A/C  45,600

          To Creditor A/C  30,400

( Being goods purchased and given cash discount )

• NOTE- Trade Discount is not recorded so it is not shown in the books of account .

• Asset is increased so it is debited as we have purchased goods so purchase a/c is debited.
• We have made some payment in cash so our one asset is reduced so it is credited and one liability has also been created .

Journal entries in the books of seller

Cash A/C DR  45,600

Debtor A/C DR  30,400

Cash Discount A/C DR 4,000

               To Sales A/C   80,000

( Being goods sold and cash discount given )

• As by selling our goods we have recieved cash so it is debited and we have created one more asset debtor so it is also debited.
• We have sold goods so it is credited.