# Please briefly explain transaction no. 2nd

Dear Student,

Transaction: Sold goods to Kumar & Sons. for 200000 at 20% trade discount and 5% cash discount.
6% of the amount received by cheque.

Explanation:

Goods worth Rs, 200000 were sold at a trade discount of 20%. Trade discount is not recorded in the books of accounts.
Therefore, value of sales to be recorded in the books = 200000 - (20% of 200000) = 200000 - 40000 = 160000

CGST on sale value @ 9% = 9% of 160000 = 14400
SGST on sale value @ 9% = 9% of 160000 = 14400

Amount paid at the time of sale = 6% of (160000 + 14400 + 14400) = 11328
Cash discount allowed on 11328= 5% of 11328 = 566

Therefore, amount received by cheque = 11328 - 566 = 10762
Remaining Amount due from Kumar & Sons = (160000 - 11328) + 14400 + 14400 = Rs. 177472

Please find the journal entry for this transaction in the following image:

Note: It has been assumed that Kumar & Sons are also from Bihar.

Regards

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• 2
Cash A/c. Dr.
Discount A/c. Dr.
To sales A/c
To output C.G.S.T A/c
To output S.G.S.T A/c
• -3
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