Question

Sold good to kitty list price 20000,trade discount 10 percent $cash discount 5 percent. He paid the amount on the same day and availed the cash discount.

Answer 1

Answer:

cash A/c dr.||17100. |

discount allowed A/c dr.||900 |

to sales A/c || |18000

Answer 2

GIVEN :  Goods sold at price 20,000 ; Trade discount = 10%; cash discount = 5%

TO FIND :   Amount paid by the purchaser

SOLUTION :

Cash and Trade Discount are given to customer .

Cost of goods sold is 20,000

Trade Discount = 20,000 × $\frac{10}{100}$

                         = 2,000

Now, the amount of goods sold = 20,000 - 2,000

                                                    = 18,000

Cash Discount = 18,000 × $\frac{5}{100}$

                         = 900

As Trade Discount is not recorded in the books of account and cash discount will be only shown in the books of account.

Journal Entries will be -

Cash A/C DR  17,100

Discount A/C DR  900

          To Sales A/C  18,000

( Being sales done and given cash discount )

Amount paid  by purchaser is 17,100 .