Question

Question 21.
Name the accounts to be credited along with the amount for payment to Ajay of ₹ 4,800 by cheque in full settlement of ₹ 5,000.

Answer 1

Answer:

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Answer 2

Explanation:

• In the above question the following entries are to be made.
• Ajay A/c has to debited by Rs 5000.
• Bank A/c has to be credited by Rs 4800.
• Discount received  has to be credited by Rs 200.
• The entry would be as follows : Ajay A/c  Dr   5000

                                                             Bank A/c  Cr   4800

                                                            Discount received Cr  200

• A discount received is a situation which arises when the buyer is allowed a discount by the seller for goods.
• In the above example the full settlement was made at Rs 4800 instead of Rs 5000 which implies a discount of Rs 200.
• Discount received leads to an increases in the income in the hands of  a buyer on one hand hand and also decreases the final amount that has to be paid for purchases on the other hand.
• Discount received is a Nominal Account and hence has to be credited as it is a gain.

Hope this helps.