Question

Receive 38000 from Krishna in full settlement of his account 40000

Answer 1

Answer:

Cash a/c Dr. 38,000

Discount alld. a/c Dr. 2,000

To Krishna 40,000

(Being cash received)

Answer 2

Answer:

Journal entry

Cash A/c                        Dr    38000

Discount allowed A/c    Dr      2000

         To Krishna A/c                             40000

(Being amount received from krishna as full settlement )

Explanation:

Cash - real account , cash comes in to the business therefore its debited

discount allowed - nominal account , its expenses to the company therefore its debited

Krishna - personal account - hs the giver of money , settles the money therefore its credited