JOURNAL ENTRY: Bought goods from Arun at a trade discount of 15%

Explanation:
When a business purchases goods or products for resale, it is necessary to record the transaction in the accounting records. In this scenario, a business bought goods from Arun for a total amount of 2,00,000 and received a trade discount of 15%. Let's break down the journal entry and explain each component in detail.

1. Date and Account Title:
The journal entry starts with the date of the transaction and the account titles involved. In this case, we would use the following account titles:
- Debit: Purchases
- Credit: Accounts Payable (Arun)

2. Amount and Trade Discount:
Next, we need to record the amount of the transaction and the trade discount received. The total amount of goods purchased is 2,00,000. As a trade discount of 15% is given, we need to calculate the discount amount and the net amount payable.

3. Calculation of Trade Discount:
To calculate the trade discount, we multiply the total amount by the discount rate. In this case:
Trade discount = Total amount * Discount rate
Trade discount = 2,00,000 * 15% = 30,000

4. Net Amount Payable:
The net amount payable is the total amount minus the trade discount. In this case:
Net amount payable = Total amount - Trade discount
Net amount payable = 2,00,000 - 30,000 = 1,70,000

5. Journal Entry:
Now that we have all the necessary information, we can record the journal entry. It would look like this:
- Debit: Purchases - 1,70,000
- Credit: Accounts Payable (Arun) - 1,70,000

The debit entry to the Purchases account represents the cost of the goods purchased, while the credit entry to the Accounts Payable account reflects the amount owed to Arun.

Summary:
To summarize, when a business purchases goods from a supplier at a trade discount, the journal entry includes the date, account titles, amount of the transaction, calculation of the trade discount, net amount payable, and the debit and credit entries. This journal entry helps in accurately recording the purchase and maintaining the proper accounting records.

Purchase a/c. Dr. 170000
to Arun a)c. cr. 170000

( according accounting we not record trade discount in the books of accounts Because trade discount is general discount to all customer to promote the sales . )