Sold goods to Yamni of list price ₹10000 at cost plus 20% less 10% trade discount to Bhupesh
Answers
Journals relating to Discount :-
Discount is a privilege/facility offer to the buyer in order to promote sales.
Discount is of two types :-
1. Cash Discount is an allowance given by the creditor to debtor for prompt or early payment of cash against his dues from the debtor.
2.Trade Discount is allowed by manufacturers or wholesalers to retailers and traders so as to encourage them to buy goods in bulky quantities. Such discounts is given to Promote sale or to attract more customers.
ANALYSIS OF THE TRANSACTION :
Accounts Affected.
1. Purchases A/c
2. Cash A/c
3. Discount Received A/c
Nature of Accounts.
1. Purchases A/c is Nominal in nature So, It will debited as per rule of nominal account “Debit all Expenses”.
2. Cash A/c is a Real in nature, and hence will be credited, According to the rule of Real account “Credit what comes out”.
3. Discount Received A/c is always credited, as it is an income which is earned or received form creditors on making prompt payment to them.So, the Journal Entry For the above transaction is :-
purchase A/c. Dr ... 8000
To cash A/c. 7,600
To Discount Received A/c. 400
(Being Goods purchased and Discount Received)
WORKING NOTES :
Given, purchased goods worth Rs. 10,000 less 20% trade discount and 5% cash discount. The net Amount will be calculated as under :
List price of Goods = 10,000
Trade Discount @ 20%
= Rs.10,000 × 20/100
= 2,000
∴ Net Amount of the bill
= 10,000 - 2,000
= 8,000
Cash Discount @ 10℅
Rs. 8,000 × 10/100
= 800
∴ Net Payment made
= 8,000 - 800
= 7200
Hope this helps!