Question

purchased merchandise on credit 50000 on trade discount 2%,quantity discount 5% and credit term (2 ½/15,n/ 60) entry

Answer 1

Hello!!

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Purchase A/c. Dr. 18000

To cash a/c. 10800

To Kamal a/c. 360

To discount receive a/c. 6,840

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since, Goods are being purchased, Purchase A/c. will be debited , because as we know goods is an assets and increase in assets results Debits.

Cash is being paid, (cash is an assets), which is decreasing and we know that, decrease in asset leads to Credit.

Kamal a/c. will be credited because kamal is a liability for us. since, we know that increase in liability leads to credit.

Since, we are receiving discount, which is income and we know that, Increase in income leads to credit.