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Journal entry of this transaction Bought goods of 8000 at 10% trade discount from suresh on the condition with 5% credit discount will be allowed of payment will made in 15 days.half amount is paid immediately?
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Journal entry of this transaction Bought goods of 8000 at 10% trade di...
Journal Entry for Purchase of Goods with Trade and Credit Discounts
Date: [Insert Date]
Transaction Details:
Bought goods worth 8000 from Suresh with a trade discount of 10%
Explanation:
When a trade discount is given, it means that the seller is giving a discount to the buyer on the list price of the goods. In this case, Suresh gave a trade discount of 10%, which means that the list price of the goods was 8000 + (10% of 8000) = 8800, but Suresh gave a discount of 10% on this amount, which is 880. Therefore, the net amount payable by the buyer is 8000.
However, Suresh also gave a credit discount of 5% on the condition that payment will be made within 15 days. This means that if the buyer pays within 15 days, he will get a 5% discount on the net amount payable.
The buyer paid half the amount immediately, which means he paid 4000 at the time of purchase.
Journal Entry:
When goods are purchased on credit, a liability is created. Therefore, the journal entry for this transaction would be:
- Debit: Purchases Account - 8000
- Credit: Suresh Account - 8000
When payment is made for the goods, the journal entry would be:
- Debit: Suresh Account - 7600 (8000 - trade discount of 800)
- Credit: Accounts Payable - 7600
If the payment is made within 15 days, and the credit discount is availed, the journal entry would be:
- Debit: Suresh Account - 7220 (7600 - credit discount of 380)
- Credit: Accounts Payable - 7220
The credit discount of 380 can be calculated as 5% of 7600.
Conclusion:
When purchasing goods with trade and credit discounts, it is important to understand the terms and conditions of the discounts being offered. It is also important to make timely payments in order to avail the credit discount. Proper journal entries must be made to record the transaction and any subsequent payments.
Community Answer
Journal entry of this transaction Bought goods of 8000 at 10% trade di...
Purchses a/c. Dr. 7200
To Cash a/c. 3420
To Dis Received a/c. 180
To Suresh a/c. 3600
To Cash a/c. 3420
To Dis Received a/c. 180
To Suresh a/c. 3600
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Journal entry of this transaction Bought goods of 8000 at 10% trade discount from suresh on the condition with 5% credit discount will be allowed of payment will made in 15 days.half amount is paid immediately?
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Journal entry of this transaction Bought goods of 8000 at 10% trade discount from suresh on the condition with 5% credit discount will be allowed of payment will made in 15 days.half amount is paid immediately? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Journal entry of this transaction Bought goods of 8000 at 10% trade discount from suresh on the condition with 5% credit discount will be allowed of payment will made in 15 days.half amount is paid immediately? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Journal entry of this transaction Bought goods of 8000 at 10% trade discount from suresh on the condition with 5% credit discount will be allowed of payment will made in 15 days.half amount is paid immediately?.
Journal entry of this transaction Bought goods of 8000 at 10% trade discount from suresh on the condition with 5% credit discount will be allowed of payment will made in 15 days.half amount is paid immediately? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Journal entry of this transaction Bought goods of 8000 at 10% trade discount from suresh on the condition with 5% credit discount will be allowed of payment will made in 15 days.half amount is paid immediately? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Journal entry of this transaction Bought goods of 8000 at 10% trade discount from suresh on the condition with 5% credit discount will be allowed of payment will made in 15 days.half amount is paid immediately?.
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