Journal Entry for Purchase of Goods with Discount

When a business purchases goods at a discounted price, it is important to record the transaction in its books of accounts. The journal entry for the purchase of goods worth ₹30,000 on a 5% discount is as follows:

HTML Bold Tag: Journal Entry

HTML Bullet Points:
• Purchase Account Dr. ₹28,500
• Discount Received Account Dr. ₹1,500
• To Supplier’s Account ₹30,000

Explanation:

The journal entry consists of three accounts: Purchase Account, Discount Received Account, and Supplier’s Account. Here’s a brief explanation of each account:

• Purchase Account: This account is debited with the net amount paid for the goods. In this case, the net amount paid is ₹28,500 (₹30,000 – 5% discount of ₹1,500).

• Discount Received Account: This account is debited with the amount of discount received. In this case, the discount received is ₹1,500.

• Supplier’s Account: This account is credited with the total amount of the transaction. In this case, the total amount is ₹30,000.

The above journal entry shows the purchase of goods worth ₹30,000 at a 5% discount. The Purchase Account is debited with the net amount paid for the goods, while the Discount Received Account is debited with the amount of discount received. The Supplier’s Account is credited with the total amount of the transaction.

This journal entry is important for the business to keep track of its expenses and to know the amount of discount received on its purchases. It also helps in preparing accurate financial statements and tax returns.

Purchase a/c Dr. 30000
To cash a/c 28500
To Discount received 1500