purchased goods worth 10000 from Irfan at a trade discount 5% and sold the same to Dravid for 15000
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Answer:
Original - The Boys.
Original Question: What is the journal entry for “purchased goods from Govind for Rs. 10,000 at 20% trade discount”?
I’ll address the question from both cash & credit purchases perspective.
Firstly, note that all types of discounts on purchases (e.g trade discount, cash discounts, rebates, etc) are treated as indirect revenue (debit for decrease & credit for increase).
Trade Discount: 20% of 10,000 = Rs. 2,000
First scenario: Cash/Cheque Purchase.
In this case, the journal entry will be as follows:
Dr. Purchases Account(purchase of goods alc) Rs. 10,0000
Cr Trade Discount Account Rs. 2,000
Cr Cash/Bank Account Rs. 8,000
Second scenario: Credit Purchase.
In this case, the journal entry will be as follows:
Dr. Purchases Account(purchase of goods alc) Rs. 10,0000
Cr Trade Discount Account Rs. 2,000
Cr Accounts Payables (Govind) Rs. 8,000
Answer:
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