Question

what is the journal entry for Cash recevied from mohan in full settlement of his account

Answer 1

Cash A/c Dr. (Amount)
Discount Allowed A/c Dr. (Amount)
To Mohan A/c (Amount)

( Being Cash received from Mohan in full-settlement of his account ).

Answer 2

Cash A/c…..Dr

To Mohan A/c

Explanation:

As given in the question, payment is made in full to Mohan therefore the given entry would be correct. As current asset is reducing, i.e. cash is reducing, according to the accounting rule, 'debit the receiver, credit the giver', we should credit as it's reducing.

As Mohan is being paid that money in full, we are crediting his account. This is a very simple and basic transaction where cash is being transferred to Mohan's account that is Mohan's Capital account.

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