Journal entries for the following
1. Purchase of asset on credit .
2. Sold goods to x of the list price of RS. 60,000 at 10% trade discount , and explain why why there is no discount allowed in the entry
1. Asset A/c Dr
To Creditor Ac
(Being purchased asset on credit)
2. X's A/C dr 54000
To salesa/c 54000
(Being Sold goods to x of the list price of RS. 60,000 at 10% trade discount)
EXPLAINATION:
There are two types of discount - Cash Discount and Trade Discount.
Journal Entries are passed for Cash discount..
Example:
X's A/c Dr 54000
Discount allowed A/c Dr 6000
To sales 6000
But no journal entries are passed for trade discount.. Only the amount is noted...
X's A/C dr 54000
To salesa/c 54000
Example: