Question

Sold goods costing 100000 to Kanika and co at 20 percent profit on sales allowing 10 percent trade discount and 5 percent cash discount

Answer 1

Answer:

Step-by-step explanation:

RohitSaketi Ace

Trade Discount is not recorded in the books of accounts..it is deducted from the List price of that product and the net amount is considered to be the historical price of that product unlike cash discount...

So the Purchase price will be

10000 - 10%(Trade Discount) = 9000

Cash Discount will be 2% * 9000(not 10000)

=180

Cash paid immediately is 60% of Purchase price = 9000*60% =5400

So the remaining amount will be a liability to us , where kamal becomes creditor to us..

remaining amount = 9000 - 5400 - 180 =3420

As Per the golden rules of accounting:-

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

Kamal being our creditor/Personal account hould be credited.. because he is at the recieving end

Cash a/c being a Real account should be credited because it is outgoing/decreasing..

Cash Discount being a nominal account should be credited because it is an income..

Purchases being a nominal account should be debited because It is an expense

So the Journal Entry will be

Purchases a/c Dr 9000

To Discount recieved a/c 180

To Cash a/c 5400

To Kamal a/c. 3420

(Being Goods Purchased from kamal)

Answer 2

Answer:

Step-by-step explanation:

Kanika & Co. Dr.

Bank a/c Dr.

Discount allowed a/c Dr.

To sales a/c