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Prepare journal entrie : sold goods to karan of list price 40000 at 10% trade discount and 2% cash discount .karan paid cash for only 40% valueof goods.?
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Prepare journal entrie : sold goods to karan of list price 40000 at 10...
Journal Entry for Selling Goods to Karan
Details of the Transaction:
- Goods sold to Karan at a list price of 40,000
- Karan received a 10% trade discount on the list price
- Karan also received a 2% cash discount for paying in cash
- Karan paid only 40% of the value of the goods in cash
Journal Entry:
- Debit: Karan's Account - 24,000 (60% of 40,000)
- Debit: Cash Discount Account - 640 (2% of 32,000)
- Credit: Sales Account - 32,000
- Credit: Trade Discount Account - 4,000 (10% of 40,000)
Explanation:
When goods are sold to customers, it is common to offer discounts to entice them to buy. In this case, Karan received both a trade discount and a cash discount. The trade discount is a reduction in the list price of the goods, while the cash discount is a reduction in the amount owed if the customer pays in cash.
In this transaction, Karan received a 10% trade discount on the list price of 40,000, which reduces the price to 36,000. He also received a 2% cash discount on the reduced price of 36,000, which brings the total amount owed to 35,360.
Karan paid only 40% of this amount in cash, which is 14,144. The remaining 60% of the amount owed, which is 21,216, is recorded as Karan's account receivable.
To record the transaction in the books of accounts, we debit Karan's account for the amount he still owes, which is 24,000 (60% of 40,000). We also debit the cash discount account for the amount of discount given, which is 640 (2% of 32,000). On the credit side, we credit the sales account for the total amount of goods sold, which is 32,000, and credit the trade discount account for the amount of discount given, which is 4,000 (10% of 40,000).
Community Answer
Prepare journal entrie : sold goods to karan of list price 40000 at 10...
1. cash A/C Dr. 14,112
Discount Allowed A/C Dr. 288
Karan Dr. 21,600
To Sales A/C 36,000
( Being goods sold to karan at 10% trade discount and2% cash discount. received 40% payment by cash )
WORKING NOTES
Invoices price of goods 40,000
less: trade discount @20% 4,000
= 36,000
i. cash transactions ( 40% of rs 36,000) 14,400
less: cash discount @5% 288
= 14,112
ii. credit transactions (60% of rs 36,000) 21,600
Discount Allowed A/C Dr. 288
Karan Dr. 21,600
To Sales A/C 36,000
( Being goods sold to karan at 10% trade discount and2% cash discount. received 40% payment by cash )
WORKING NOTES
Invoices price of goods 40,000
less: trade discount @20% 4,000
= 36,000
i. cash transactions ( 40% of rs 36,000) 14,400
less: cash discount @5% 288
= 14,112
ii. credit transactions (60% of rs 36,000) 21,600
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Prepare journal entrie : sold goods to karan of list price 40000 at 10% trade discount and 2% cash discount .karan paid cash for only 40% valueof goods.?
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Prepare journal entrie : sold goods to karan of list price 40000 at 10% trade discount and 2% cash discount .karan paid cash for only 40% valueof goods.? for Class 11 2024 is part of Class 11 preparation. The Question and answers have been prepared according to the Class 11 exam syllabus. Information about Prepare journal entrie : sold goods to karan of list price 40000 at 10% trade discount and 2% cash discount .karan paid cash for only 40% valueof goods.? covers all topics & solutions for Class 11 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Prepare journal entrie : sold goods to karan of list price 40000 at 10% trade discount and 2% cash discount .karan paid cash for only 40% valueof goods.?.
Prepare journal entrie : sold goods to karan of list price 40000 at 10% trade discount and 2% cash discount .karan paid cash for only 40% valueof goods.? for Class 11 2024 is part of Class 11 preparation. The Question and answers have been prepared according to the Class 11 exam syllabus. Information about Prepare journal entrie : sold goods to karan of list price 40000 at 10% trade discount and 2% cash discount .karan paid cash for only 40% valueof goods.? covers all topics & solutions for Class 11 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Prepare journal entrie : sold goods to karan of list price 40000 at 10% trade discount and 2% cash discount .karan paid cash for only 40% valueof goods.?.
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