Answer / vijay rathi

Reasons for not Recording Trade Discount is:
Since it is given at time of sales to induce bulk purchases, therefore it is regarded as reduction in Selling Price. Thus for purchaser total cost of goods becomes = Actual Price - Trade Discount
Journal Entry
Purchase A/c....Dr 9500
To Sundry Debtor/cash/bank A/c. 9500

On Other hand, Cash discount is given to prompt purchaser for early payment for goods which he has already purchased. Now since the creditors are alredy on books of Purchaser with total Value, therefore any discount received while payment to them is gain for them:
Journal Entry
Creditors A/c Dr 10000
To Cash Discount 500
To Cash/Bank 9500

Answer / rajeev roy

Purchase A/C DR. RS. 95,000.00
T0 Discount A/C Rs. 4750.00
T0 Bank A\C/Cash A/c Rs. 90250.00

Answer / tanya

Trade discount is allowed when goods ate purchased in bulk or huge quantity. This discount is allowed both on credit as well as cash transactions. Since it is related to purchase and not to the payment.

Cash discount is allowed to the customer for making prompt or early payment. In other words, cash discount is allowed only if the customer makes payment within a fixed period. Such discount motivates the customer to make the payment earliest.

Answer / chintan shah

Difference between Cash Discount & Trade Discount

Cash Discount

Trade Discount

Cash Discount Account is opened in the ledger. Trade Discount account is not opened in the ledger.
Cash discount is granted by the supplier in the consideration of instant payment. Trade Discount is granted by the supplier from the list of goods or services on consideration of business.
It is allowed on payment of money. It is allowed on purchase of goods.
It is not shown in the invoice. It is shown by the way of deduction in the invoice.
It encourages prompt payment. It is allowed to encourage the sales.
This discount varies with the time period within which payment is received. This discount varies with the quantity of goods purchased.

Answer / jitendra kumar mishra

Trade discount is given at the time of selling goods but
cash discount is given to collect balance quicly.Entry for
this transaction will be
Purchase A/C Dr. 9500
Discount A/C 475
Cash/Bank A/c 9025

Answer / lalit sharma

Trade discount is deducted from the total cost. Now we have
purchase value of the product is $95,000.00. Because we
don't account trade discount in accounting. Cash discount
will be applied on $95,000.00 and accounted for accounting
as below:

Purchase A/C Dr. $95000.00
To Discount recieve A/C Cr. $4750.00
TO Cash A/C Cr. $90250.00
(Being trade discount and cash discount recieved from
customer for goods purchased in cash)

Answer / mohammad rashid

purcahse a/c dr 95000
To Cas/Bank 90250
To Discount Recv. 4750

(Being amount paid against purchased of goods with received trade & cash discount)

Answer / yash

in case of trade discount
purchase a/c dr.........100000
to, discount a/c................5000
to, cash a/c...................95000

in case of cash discount
purchase a/c dr............95000
to, cash a/c....................95000

Answer / jyoti

Purchase A/c Dr. 9025
Discount Received A/c Dr. 425
To Cash A/c 9500



NOTE:- Trade discount is not shown in books ,Only amount of trade discount is deducted out of total amt.

Answer / pranjal

CASH DISCOUNT IS NEVER SHOWN IN THE JOURNAL ENTRY BUT TRADE
DISCOUNT IS SHOWN IN THE JOURNAL ENTRY.

(A)5% TRADE DISCOUNT

PURCHASE A/C DR. 9500
DISCOUNT RECEIVED DR. 500
TO CASH A/C CR.10,000
(BEING GOODS PURCHASE WITH TRADE DISCOUNT)

(B) 5% CASH DISCOUNT

PURCHASE A/C DR. 9500
TO CASH A/C CR.9500
(BEING GOODS PURCHASED)

Discuss the factors to be considered by the auditor in order to determine an audit strategy.

0 Answers  

we want to know that the rate of TDS on contractor , rent, Professional and also know that what is the minimum amount for TDS on Contractor , Professional

4 Answers  

EBIDTA

5 Answers  

What is the difference between amalgamation, absorption, liquidation ? Why realisation account is being prepared ?

1 Answers  

central excise all question

0 Answers   TATA, Vijaya Aero Blocks,

I WANT TO DO MY ARTICLE-SHIP FROM DELLOITS KOLKATA..PLEASE HELP??

0 Answers   Deloitte,

I 've Tally7.2 in my pc & i have Data from 2005 but my Auditor wants only data from 2008 -2009 How do i send that years data i means from 2008 -2009

4 Answers  

internal audit

5 Answers  

while calculating drawing power for the purpose of cc limit ,while deducting creditors from stock whether to consider debit balance of creditors ,in total of creditors' credit balance ?

0 Answers  

Define vouching?

0 Answers  

what are the golden rules for accounts receivable?

0 Answers  

What is continuous audit?

3 Answers