Question

What will be the journal entry for received rs.6000 from a debtor in full settlement of rs.6500?

Answer 1

total receivable = 6500

actual amount recieved by = 6000

Discount allowed= 6500-6000=500

So the current transaction affects three accounts...

Discount allowed account(Discount allowed to an extent of 500 ,cash account(amount to an extent of 6000), Debtor's account(owes us money and she/he z paying back)...

Discount allowed account is a nominal account (coz its a loss to us ; all losses Gains income expenses come under nominal account)

Debtor's account is a Personal account (as the name suggests)

Cash account is a real account.(Cash balance is an asset ; all assets and Liabilities come under Real account)

The Three golden rules of accounting are..

Personal account - Debit the receiver ,credit the giver

Real account - Debit what comes in ,credit what goes out

Nominal account - Debit All expenses and losses credit , All incomes and gains

Discount allowed and cash accounts are to be debited..(expense ; money is comingin)

Debtor's account should be credited (Debtor is giving/the giver)

So the Journal Entry will be...

cash a/c Dr 6000

Discount Allowed a/c 500

To Debtor's a/c. 6500

(Being Debtor's account settled)

Answer 2

Cash a/c Dr... 6000 Discount a/c... 500        To debtors a/c.. 6500