Journal Entry for Payment Made to Mahesh with Discount Received

When a business makes a payment to a supplier, it needs to record the transaction in its accounting system. In this case, the business paid cash to Mahesh and also received a discount from him. The journal entry to record this transaction would be as follows:

1. Debit the Expense Account:
The first step is to debit the expense account for the amount paid to Mahesh. This account represents the cost of goods or services purchased by the business. In this case, the expense account would be "Purchases" or "Inventory". The amount of the purchase is ₹ 9600.

2. Credit Cash Account:
The second step is to credit the cash account for the amount paid to Mahesh. The cash account represents the amount of money the business has in its bank account. In this case, the cash account would be credited with ₹ 9600.

3. Credit Discount Received Account:
The third step is to credit the discount received account for the amount of the discount received from Mahesh. The discount received account represents the reduction in the cost of goods or services purchased by the business. In this case, the discount received account would be credited with the discount amount.

The journal entry to record the payment made to Mahesh with discount received would be as follows:

Purchases Account Debit - ₹ 9600
Cash Account Credit - ₹ 9600
Discount Received Account Credit - Discount Amount

In conclusion, the above journal entry records the payment made to Mahesh with the discount received from him. It helps in maintaining accurate financial records of the business and ensures that all transactions are properly accounted for.

1. Mahesh Dr. 10,000
To Cash A/C 9,600
To Discount Received A/C 400
( Being cash paid to mahesh in full settlement of his account )