Question

Sold goods to Sherpa at the list price of 50,000 less 20% trade discount and 4%
cash discount if the payment is made within 7 days. 75% payment is received by
cheque on Jan. 23rd.
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Answer 1

Answer:

1st payment entry

 Cash A/C           Dr       28800

 discount allowed a/c  Dr   1200

    To   Sherpa                           30000

2nd payment entry :----

 cash a/c         dr         10000

    to shrepa                       10000

Explanation:

amount of  goods                   50000

less:   trade discount        (10000)

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

                                             40000

here not givin the date of tranasaction so we assume that 75% amount received within 7 days of tranaction then the amount of that :---

  amount after TD(40000×75%)                                       30000

 less:   cash discount(30000× 4%)                                     (1200)

                                                                                              ________

                                                                                                28800

trade discount is not shown in the books of account because we assume that it is incurred for pramoting the sales while the discount of cash is recorded