Login

Record The Transaction in Journal-
  • ​ Bought Goods at the list price of Rs 25000 from M​ohan less 20%trade discount and 2% cash discount and paid 40% by cheque.

Dear Student,
 
 Particulars  Amount (Rs)
Goods' List Price  25,000
Less: Trade discount @ 20% ( = 25,000×20100= Rs 5,000)   (5,000)
= Purchase Price   20,000
 Less : Cash Discount @ 2% = 20,000×2100= Rs 400      (400)
Net payment to be made after discount   19,600
Payment through cheque (40%)    7,840
Payment through cash (60%) [considering as cash discount is given so complete payment made instantly,as 40% made by cheque so remaining by cash)  11,760
     
 
Journal
Date Particulars L.F. Debit
Amount
(Rs)		 Credit
Amount
(Rs)
  Purchases A/c  Dr.    20,000  
     To Discount received A/c             400
     To Bank A/c          7,840
     To Cash A/c        11,760
  (Purchased goods from Mohan at 20% trade discount & 2% cash discount)        

On the contrary, there can be other treatment as well wherein 60% would be considered on credit.In that case cash discount would be taken on 40% 0f 20,000 i.e. 8,000

Journal in that case would be as follows:
 
Journal
Date Particulars L.F. Debit
Amount
(Rs)		 Credit
Amount
(Rs)
  Purchases A/c  Dr.    20,000  
     To Discount received A/c (8000*2%)             160
    To Bank A/c (8000-160)          7,840
     To Mohan A/c        12,000
  (Purchased goods from Mohan at 20% trade discount & 2% cash discount)        

Regards,
 

  • 0
View Full Answer
yes
 
  • 1
 PURCHASED FOR 25000 20% TRADE DISCOUNT (NEED NOT TO BE ENTERED IN THE JOURNAL ) THAT'S 20000 (RS.5000) 2% CASH DISCOUNT (TO BE ENTERED IN CASH BOOK) THAT'S (RS.400) 19,600 ONLY 40% OF THE CASH WAS PAID THAT'S (FROM RS.19600) RS.7840
  • 0
Rs. 25,000 is the list price.
Trade Discount = 20% = 20% of 25,000 = 5,000
Therefore, Net Purchases Value = 25,000 - 5,000 =20,000
Further 40% is paid by cheque
40% of 20,000 = 8,000
Cash Discount = 2% = 2% of 8000 = 160
Cheque issued is for 8,000 - 160 = 7,840
60% of the purchase is on an entirely credit basis: 20,000 - 8,000 = 12,000

The Journal entry is as follows:
Purchases A/c                       ...dr.  20,000
  To Cash A/c                                              7,840
  To Discount Received A/c                           160
  To Mohan                                                 12,000
(Being the goods worth Rs. 25,000 purchased from Mohan @20% trade discount, 2% cash discount, 40% of the amount piad by cheque)
 
  • 4
yes
 
  • 0
What are you looking for?