Question

Recieved rs 975 from harikrishna in full settlement of his account of rs 1000

Answer 1

Given " recieved 975 from hari krishna and settled his dues of 1000" 

This transaction gives us a clue that Amount is due from Hari krishna so he will be "Debtor " 

and his account is settled completely.even though amount recieved is Less than amount owed...so Difference in amount will be discount..So 1000 - 975= 25 will be Discount (allowed)



This transaction affects three accounts... Hari krishna a/c , cash a/c and discount allowed a/c
where Hari krishna account is a personal account, cash account is a real account, Discount allowed account is a nominal 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

So basing on the above rules..

Hari krishna being the giver should be credited , discount allowed being loss should be debited, money is incoming/ increasing so cash account should be Debited...


So the Journal Entry will be - 

Cash a/c. Dr. 975

Discount allowed a/c Dr 25

To Hari krishna a/c. 1000

(Being Hari krishna account settled by Cash)

Answer 2

bimal who owned us 6000,paid 5400 in full settlement of his account