Question

Sold goods costing ₹ 40,000 to Anil against a current dated cheque at a profit of 25 % on cost less 20 % trade discount plus ! GST @ 12 % . Cash discount is allowed @ 2 % .

Answer 1

This transaction affects five accounts... Sales account (Goods are sold) .. discount recieved (cash discount) account ... bank account (recieved Cheque)..and Output CGST,output SGST accounts

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

Given Cost Price = 40000

Profit rate = 25%

Profit= Cost Price × Profit rate

= 40000 × 25% = 10000

List Price= Cost Price + Profit

= 40000 + 10000 =50000

Trade Discount rate = 20%

Trade Discount amount= List price × Trade Discount rate..

=50000 × 20 % = 10000

Actual Sale Price = List Price - Trade Discount amount

=50000 - 10000 = 40000

cash discount allowed =2%

40000×2% = 800

Net Amount - discount = 40000 -800 = 39200

Gst = 39200×2% = 4704


The Three golden rules of accounting are

Personal account - Debit the receiver credit the giver

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

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

bank ccount is a real account ..(all assets and Liabilities come under Real account.. cash is a real account)

discount allowed account and Sales account are nominal accounts...(all expenses incomes gains losses come under nominal account.. discount is a loss, sales is an income)

in contention with the above rules...The Journal entries will be...

Bank a/c Dr 48608

discount allowed a/c Dr 800

To sales account 40000

To Output CGST a/c 4704

To output SGST a/c 4704

(being goods sold)

Answer 2

Your answer is in the attachment.

I assumed the transaction to be INTRA STATE SALES. (CGST and SGST).

And hence charged OUTPUT CGST and OUTPUT SGST.

If it is INTER STATE SALES, replace OUTPUT CGST and OPTPUT SGST with OUTPUT IGST.