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Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade Discount ogle Le and 3% Cash Discount if payment is made within 14 days. Mittal Bros. received 10 shawls of poor quality, which it returned. Mittal Bros. settled the payment in 10 days.
? Related: Journal - Class 11th
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Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade...
Journal Entry for Mittal Bros. Purchase of Shawls with Discounts and Returns
Purchase of Shawls:
- Debit: Shawls A/c (100 shawls @ 3,000 per shawl) - 300,000
- Credit: Supplier's A/c - 300,000
Trade Discount:
- Debit: Supplier's A/c - 30,000 (10% of 300,000)
- Credit: Trade Discount Received A/c - 30,000
Returns:
- Debit: Supplier's A/c - 30,000 (10 shawls @ 3,000 per shawl)
- Credit: Shawls A/c - 30,000
Cash Discount:
- Debit: Supplier's A/c - 8,910 [(270,000 - 30,000) x 3%]
- Credit: Cash Discount Received A/c - 8,910
Payment:
- Debit: Supplier's A/c - 261,090 (270,000 - 8,910)
- Credit: Bank A/c - 261,090
Explanation:
- Mittal Bros. purchased 100 shawls @ 3,000 per shawl for a total of 300,000.
- They received a Trade Discount of 10% on the total purchase, which amounted to 30,000.
- They returned 10 shawls of poor quality, which were worth 30,000.
- They were eligible for a Cash Discount of 3% if they made the payment within 14 days. The amount eligible for the Cash Discount was 270,000 (300,000 - 30,000).
- Mittal Bros. settled the payment in 10 days and paid 261,090 (270,000 - 8,910) after deducting the Cash Discount.
- The journal entry above reflects the transactions related to the purchase, discounts, returns, and payment.
Purchase of Shawls:
- Debit: Shawls A/c (100 shawls @ 3,000 per shawl) - 300,000
- Credit: Supplier's A/c - 300,000
Trade Discount:
- Debit: Supplier's A/c - 30,000 (10% of 300,000)
- Credit: Trade Discount Received A/c - 30,000
Returns:
- Debit: Supplier's A/c - 30,000 (10 shawls @ 3,000 per shawl)
- Credit: Shawls A/c - 30,000
Cash Discount:
- Debit: Supplier's A/c - 8,910 [(270,000 - 30,000) x 3%]
- Credit: Cash Discount Received A/c - 8,910
Payment:
- Debit: Supplier's A/c - 261,090 (270,000 - 8,910)
- Credit: Bank A/c - 261,090
Explanation:
- Mittal Bros. purchased 100 shawls @ 3,000 per shawl for a total of 300,000.
- They received a Trade Discount of 10% on the total purchase, which amounted to 30,000.
- They returned 10 shawls of poor quality, which were worth 30,000.
- They were eligible for a Cash Discount of 3% if they made the payment within 14 days. The amount eligible for the Cash Discount was 270,000 (300,000 - 30,000).
- Mittal Bros. settled the payment in 10 days and paid 261,090 (270,000 - 8,910) after deducting the Cash Discount.
- The journal entry above reflects the transactions related to the purchase, discounts, returns, and payment.
Community Answer
Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade...
Accounting treatment of Trade discount is not shown in books of account.
1. For purchase of shawls on credit (because settlement is made later)
Debit Purchases A/c by ₹270000
Credit Supplier's A/c by ₹261900 (270000-8100)
Credit Discount Received by ₹8100 (3% of 270000)
2. For Returning Poor Quality Shawls and Settling the payment :
Debit Supplier's A/c by ₹261900
Debit Discount Rec. by ₹ 810 (3% of 27000)
Credit Cash A/c by ₹ 235710 (balancing fig.)
Credit Purchases Return by ₹ 27000
This entry can also be done separately. Like:
For returning the Shawls :
Debit Supplier's A/c by ₹ 26190 (27000 - 810)
Debit Discount Rec by ₹ 810
Credit Purchases Return by ₹ 27000
For settlement :
Debit Supplier's A/c by ₹ 235710 (261900 - 26190)
Credit Cash A/c by ₹ 235710
1. For purchase of shawls on credit (because settlement is made later)
Debit Purchases A/c by ₹270000
Credit Supplier's A/c by ₹261900 (270000-8100)
Credit Discount Received by ₹8100 (3% of 270000)
2. For Returning Poor Quality Shawls and Settling the payment :
Debit Supplier's A/c by ₹261900
Debit Discount Rec. by ₹ 810 (3% of 27000)
Credit Cash A/c by ₹ 235710 (balancing fig.)
Credit Purchases Return by ₹ 27000
This entry can also be done separately. Like:
For returning the Shawls :
Debit Supplier's A/c by ₹ 26190 (27000 - 810)
Debit Discount Rec by ₹ 810
Credit Purchases Return by ₹ 27000
For settlement :
Debit Supplier's A/c by ₹ 235710 (261900 - 26190)
Credit Cash A/c by ₹ 235710
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Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade Discount ogle Le and 3% Cash Discount if payment is made within 14 days. Mittal Bros. received 10 shawls of poor quality, which it returned. Mittal Bros. settled the payment in 10 days. Related: Journal - Class 11th?
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Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade Discount ogle Le and 3% Cash Discount if payment is made within 14 days. Mittal Bros. received 10 shawls of poor quality, which it returned. Mittal Bros. settled the payment in 10 days. Related: Journal - Class 11th? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade Discount ogle Le and 3% Cash Discount if payment is made within 14 days. Mittal Bros. received 10 shawls of poor quality, which it returned. Mittal Bros. settled the payment in 10 days. Related: Journal - Class 11th? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade Discount ogle Le and 3% Cash Discount if payment is made within 14 days. Mittal Bros. received 10 shawls of poor quality, which it returned. Mittal Bros. settled the payment in 10 days. Related: Journal - Class 11th?.
Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade Discount ogle Le and 3% Cash Discount if payment is made within 14 days. Mittal Bros. received 10 shawls of poor quality, which it returned. Mittal Bros. settled the payment in 10 days. Related: Journal - Class 11th? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade Discount ogle Le and 3% Cash Discount if payment is made within 14 days. Mittal Bros. received 10 shawls of poor quality, which it returned. Mittal Bros. settled the payment in 10 days. Related: Journal - Class 11th? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Mittal Bros. purchased 100 shawls @ 3,000 per shawl. Allowed 10% Trade Discount ogle Le and 3% Cash Discount if payment is made within 14 days. Mittal Bros. received 10 shawls of poor quality, which it returned. Mittal Bros. settled the payment in 10 days. Related: Journal - Class 11th?.
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