Question 25.
Mittal Cycles purchased 100 cycles from Hero Cycles, Ludhina (Punjab) @ ₹ 1,200 per cycle plus IGST @ 12%. Hero Cycles allowed 10% Trade Discount and 3% Cash Discount if payment is made within 14 days. Mittal Cycles received 10 cycles damaged during transit, which it returned. Mittal Cycles settled the payment in 10 days time.
Pass Journal entries for the above transactions.
Answers
Answer:
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The journal entries to correct the errors is shown below:
Explanation:
The journal entries to correct the errors is as:
Purchase A/c..............................Dr Rs 108,000
Input IGST A/c............................Dr Rs 12,960
Hero Cycles A/c............................Cr Rs 120,960
Being goods purchased with 10% trade discount and IGST
Hero Cycles A/c........................................Dr Rs 12,096
Purchase Return A/c..............................Cr Rs 10,800
Input IGST A/c..........................................Cr Rs 1,296
Being 10 cycles returned
Hero Cycles A/c........................................Dr Rs 108,864
Cash A/c.......................................................Cr Rs 105,598
Discount Received A/c.............................Cr Rs 3,266
Being balance amount paid after receiving cash discount of 3%
Working Note:
IGST = Rs 108,000 × 12%
= Rs 12,960
Cash Discount = Rs 108,864 × 3%
= Rs 3,266