Question

Purchased goods worth Rs 85000 less 20% trade discount and 5% cash discount for cash and supplied them to Ramesh and co. At list price less 10% trade discount.

Answer 1

Purchase a/c _dr=68000 To cash =6460 To discount =340 To Ramesh=13200

Answer 2

List Price = Rs.85,000

Trade Discount = Rs.85,000 × 20% = Rs.17,000

Agreed Price = Rs.85,000 - Rs.17,000 = Rs.68,000

Cash Discount = Rs.68,000 × 5% = Rs.3,400

Purchase Price = Rs.68,000 - Rs.3400 =  Rs.64,600

Journal Entry for purchase of goods:

Purchases A/C  Dr   Rs.68,000

   To Discount Received A/C  Rs.3,400

   To Cash A/C  or Bank A/C   Rs.64,600

(being goods purchased)

Sale Price = Rs.85,000 - Rs.8500 = Rs.76,500

Journal Entry for sales made :

Ramesh A/C  Dr   Rs.76,500

   To sales A/C   Rs.76,500

(being goods sold to Ramesh)