Question

Received 3950form amar singh in full settelment of his account of 4000 what is the journal entry answer

Answer 1

3 golden rules

• debit the receiver , credit the giver

•       debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

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reason for debit and credit

Singh A/c - Personal account , where singh is the debtor who is the payer , therefore its credited

Cash A/c- Real A/c , money comes into the company therefore its debited

Discount allowed - Nominal A/c , its a expenses or loss to the company therefore its debited

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Journal entry

Cash A/c Dr                      3950

Discount allowed A/c Dr      50

              To singh A/c                            4000

(being received cash from singh in full settlement )

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* gst entries will be entered at the time of sale not at the time of receipt. therefore no gst entries.

Answer 2

Total Amount receivable (from Amar singh) = actual amount + Discount allowed= 4000

actual amount recieved by Cheque/cash= 3950

Discount allowed= 50

So the current transaction affects three accounts...

Discount allowed account(Discount allowed to an extent of 50 ,Bank/cash account(amount to an extent of 3950 is recieved in the form of Cheque/cash), Amar singh account(Amar singh owes us money and she z paying back)...

Discount allowed account is a nominal account (coz its a loss to us ; all losses Gains income expenses come under nominal account)

Amar singh account is a Personal account (as the name suggests)

Bank/cash account is a real account.(Bank balance is an asset ; all assets and Liabilities come under Real account)

The Three golden rules of accounting are..

Personal account - Debit the receiver ,credit the giver

Real account - Debit what comes in ,credit what goes out

Nominal account - Debit All expenses and losses credit , All incomes and gains

Discount allowed and Bank/cash accounts are to be debited..(expense ; money is comingin)

Amar singh account should be credited (poonam is giving/the giver)

So the Journal Entry will be...

Bank/cash a/c Dr 3950

Discount Allowed a/c 50

To Amar singh a/c. 4000

(Being Amar singh's account settled)