Question

sold goods for cash of the list price of 25000 at 20% trade discount and 5% cash discount

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Answer 1

Answer:Cash A/c....Dr. 19000

Dis. Allowed.... Dr. 1000

To sales 20000

Explanation:trade discount does not appears in books of a/c....but only amount is calculated.

Answer 2

Answer:

Cash A/c....Dr. 19000

Dis. Allowed... Dr. 1000

           To sales 20000

(being sold goods for cash also provide a discount to customer)

Explanation:

Trade discount(not recorded in books) 25000*20%=5000

Sales Value=25000-5000=20000

Cash Discount=20000*5/100=1000

Our transaction is

sold goods for cash at the list price of 25000 at a 20% trade discount and a 5% cash discount

Journal Entry

Particular                                             Dr.(Amount)   Cr. (Amount)

cash A/C     Dr.                                     19000

Discount A/C Dr.                                   1000

  To Sales  A/C                                                                 20000

(Being Sold goods on cash)

sale goods on credit

A corporation makes money when it sells products and permits the customer to pay later. This is known as a sale on credit. Another name for this is a sale on the account. Typically, this means that the seller of the items is giving the buyer ownership of those goods in exchange for receiving a current asset called accounts receivable.

Simply put, "sold products on credit" refers to the sale of commodities on a credit basis. giving the buyer products with the understanding that payment will come later. This amount due by the debtor is a current asset for the business and increases its accounts receivable. Journal entry for merchandise sold with credit.

Trade Discount

Trade Discount is the discount that manufacturers or wholesalers give to their consumers at the time of purchase, based on a predetermined percentage off the item's catalogue price. Manufacturers utilise it as a tactic to draw people in, boost sales, and promote large purchases. As a result, the rate of discount generally rises along with the volume of transactions.

• The fact that trade discounts are neither deducted nor credited in the journal entry is crucial. As a result, the discount is deducted from the quoted price, and the journal record for the transactions is updated to reflect the new price.
• Additionally, the trade discount is once more subtracted from the catalogue price of the goods at the time of purchase or sales return, and the net amount is entered.

Cash Discount

A reduction in the purchase price of a good as a result of an early cash payment is known as a cash discount, also known as a buy discount or sales discount. In other words, if the customer is willing to pay for the good sooner, the seller will be willing to lower the price of the good.

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