Pass the given journal entry - Sold goods costing 6000 at 15000 Allowe...
**Journal Entry for Sale of Goods with Trade and Cash Discounts**
The journal entry for the sale of goods with trade and cash discounts is as follows:
**Date:**
**Particulars** | **Debit Amount** | **Credit Amount**
---|---|---
Cash/Bank Account | 14,175 |
Trade Discount Account | 1,500 |
Sales Account | | 15,000
Cost of Goods Sold Account | 6,000 |
**Explanation of the Journal Entry:**
The given transaction involves the sale of goods costing 6000 at 15000, along with a trade discount of 10% and a cash discount of 5%. The following are the details of the journal entry:
1. **Cash/Bank Account Debit:** The cash/bank account is debited with the amount received from the customer, which is 14,175. This is calculated by deducting the cash discount of 5% (which is 750) from the total amount of 15,000.
2. **Trade Discount Account Debit:** The trade discount account is debited with the amount of the trade discount, which is 1,500. This discount is given to the customer as a reduction in the selling price of the goods.
3. **Sales Account Credit:** The sales account is credited with the total selling price of the goods, which is 15,000. This is the amount the customer pays for the goods after deducting the trade and cash discounts.
4. **Cost of Goods Sold Account Credit:** The cost of goods sold account is credited with the cost of the goods sold, which is 6,000. This is the amount the business spent to purchase the goods that were sold.
**Conclusion:**
In conclusion, the journal entry for the sale of goods with trade and cash discounts involves debiting the cash/bank and trade discount accounts and crediting the sales and cost of goods sold accounts. The trade discount is given to the customer as a reduction in the selling price of the goods, while the cash discount is given as an incentive for the customer to pay early.
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