Question

sold goods to Mr Brown for 45000 profit of 10% trade discount five percent

Answer 1

3 golden rule

• debit the receiver , credit the giver

• debit what comes in , credit what goes out

• debit all the expenses and losses , credit all the incomes and gains

----------------------------------------------------------------------------------------------------------------

reason for debit and credit

sales A/c - Nominal A/c , its a income to the company therefore its credited

Mr Brown A/c - personal A/c , where the debtor is receiver of goods therefore its debited .

.--------------------------------------------------------------------------------------------------------------

Calculation of sales

cost =45000

sales =45000+(45000*10%)

=45000+4500

=49500

net sales = sales - trade discount

= 49500-(49500*5%)

=49500-2475

=47025

---------------------------------------------------------------------------------------------------------

Journal entry

Mr Brown A/c Dr 47025

To Sales A/c 47025

(Being credit sales made )

note : trade discount should be deducted from sales amount .

no journal entry passed for trade discount