Purchased goods of rs 50000 from Ram @10 trade discount and 10% cash discount and paid 50% by cheque.pass journal entry
Answers
List price = Rs.50,000
Trade Discount = 10%(50,000) = Rs.5000
Agreed Price = Rs.50,000 - Rs.5000 = Rs.45,000
Immediate cash payment = 50%(45,000) = Rs.22,500 - Rs.2250 = Rs.20,250
Cash Discount = 10%(22,500) = Rs.2250
Journal Entry
Purchases A/C Dr Rs.45,000
To Cash A/C Rs.20,250
To Cash Discount A/C Rs.2250
To Ram A/C Rs.22,500
(being goods purchased from Ram)
Answer:
Trade Discount is a reduction from the item's list price that the trader grants the client at a predetermined pace. On the other hand, a Cash Discount is a discount for which the consumer is eligible if they pay for their purchases in cash within the allotted period.
Explanation:
List price = Rs.50,000
Trade Discount = 10%(50,000) = Rs.5000
Agreed Price = Rs.50,000 - Rs.5000 = Rs.45,000
Immediate cash payment = 50%(45,000) = Rs.22,500 - Rs.2250 = Rs.20,250
Cash Discount = 10%(22,500) = Rs.2250
Journal Entry
Purchases A/C Dr Rs.45,000
To Cash A/C Rs.20,250
To Cash Discount A/C Rs.2250
To Ram A/C Rs.22,500
(being goods purchased from Ram)
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