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Purchased goods worth 5000 for cash less 20% trade discount and 5% cash discount journal entries?
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Purchased goods worth 5000 for cash less 20% trade discount and 5% cas...
Understanding the Purchase Transaction
When goods are purchased for cash, trade discounts and cash discounts play a crucial role in determining the final amount paid. In this case, we have:
- Purchase Amount: 5000
- Trade Discount: 20%
- Cash Discount: 5%
Step 1: Calculate Trade Discount
- Trade Discount Amount:
- Trade Discount = 20% of 5000
- Trade Discount = 1000
- Net Purchase Amount after Trade Discount:
- Net Purchase = Purchase Amount - Trade Discount
- Net Purchase = 5000 - 1000 = 4000
Step 2: Calculate Cash Discount
- Cash Discount Amount:
- Cash Discount = 5% of 4000
- Cash Discount = 200
- Final Amount Paid:
- Final Amount = Net Purchase - Cash Discount
- Final Amount = 4000 - 200 = 3800
Journal Entries
Here are the journal entries for this transaction:
Final Journal Entry Summary
The final journal entry reflects the net purchase and the discounts received:
- Debit: Purchases 4000
- Credit: Cash 3800
- Credit: Trade Discount Received 1000
- Credit: Cash Discount Received 200
This method ensures accurate recording and reflects the true cost of purchases effectively.
When goods are purchased for cash, trade discounts and cash discounts play a crucial role in determining the final amount paid. In this case, we have:
- Purchase Amount: 5000
- Trade Discount: 20%
- Cash Discount: 5%
Step 1: Calculate Trade Discount
- Trade Discount Amount:
- Trade Discount = 20% of 5000
- Trade Discount = 1000
- Net Purchase Amount after Trade Discount:
- Net Purchase = Purchase Amount - Trade Discount
- Net Purchase = 5000 - 1000 = 4000
Step 2: Calculate Cash Discount
- Cash Discount Amount:
- Cash Discount = 5% of 4000
- Cash Discount = 200
- Final Amount Paid:
- Final Amount = Net Purchase - Cash Discount
- Final Amount = 4000 - 200 = 3800
Journal Entries
Here are the journal entries for this transaction:
- Purchase Account Debit: 4000
- Cash Account Credit: 3800
- Trade Discount Received Account Credit: 1000
- Cash Discount Received Account Credit: 200
Final Journal Entry Summary
The final journal entry reflects the net purchase and the discounts received:
- Debit: Purchases 4000
- Credit: Cash 3800
- Credit: Trade Discount Received 1000
- Credit: Cash Discount Received 200
This method ensures accurate recording and reflects the true cost of purchases effectively.
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Purchased goods worth 5000 for cash less 20% trade discount and 5% cash discount journal entries?
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Purchased goods worth 5000 for cash less 20% trade discount and 5% cash discount journal entries? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Purchased goods worth 5000 for cash less 20% trade discount and 5% cash discount journal entries? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Purchased goods worth 5000 for cash less 20% trade discount and 5% cash discount journal entries?.
Purchased goods worth 5000 for cash less 20% trade discount and 5% cash discount journal entries? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Purchased goods worth 5000 for cash less 20% trade discount and 5% cash discount journal entries? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Purchased goods worth 5000 for cash less 20% trade discount and 5% cash discount journal entries?.
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