Question

X sells good on credit to Y . He receives 10% trade discount from X and a further 5% cash discount if paid within 15 days . Y bought goods with a list price of 2,00,000 from X. Which of the following journal entry would correctly record the sale in the books of X

Answer 1

Answer:

Your credit sales journal entry should debit your Accounts Receivable account, which is the amount the customer has charged to their credit. And, you will credit your Sales Tax Payable and Revenue accounts.

2.Trade discount is a type of discount offered by the sellers to the purchaser for purchasing goods in large quantities. Trade discount is imposed on the list price i.e. the catalog price of the product. ... Journal Entry for Trade discount is not recorded in the books of accounts.

Explanation:

Take a look at the three main rules of accounting:

.Debit the receiver and credit the giver.

.Debit what comes in and credit what goes out.

.Debit expenses and losses, credit income and gains.