what is the difference between cash discount and trade
discount.
what is the journal entry for purchase of 100000 giving
(a) 5% trade discount
(b) 5% cash discount.
Answer Posted / kasi reddy
Trade Discount is the deduction granted by supplier towards
business consideration to increase the sales with bulk
qualtity of goods/services. Trade discount will never be
recorded in books of accounts, since it is given on invoice
copy. Trade discount is given to promote the sales.
The Cash Discount is the reduction granted by supplier for
encourage the prompt or Immediate payment.
The details are as follows.....
Total sales = 100000
Trade discount = 5% on 100000 = 100000*5/100 = 5000
The actual sales = 100000-5000 = 95000.
Cash Discount is 5% on 95000 = 95000*5/100 = 4750.
Now the entry for cash discount is: -
Purchases a/c DR 95000,
To Discount received a/c 4750,
To Cash/Bank a/c 90250.
(Being cash Discount received from purchaser)
Is This Answer Correct ? | 23 Yes | 4 No |
Post New Answer View All Answers
How does the internal audit differ from an external audit?
Why do you want to work in audit?
When should a company sack its auditor?
what percent of wages calculate from sales of a firm (registered under manufacturing of machinery spares) sales (appr)- RS.10000000/-
what are the main tools of auditing?
what are procedure we need to do at the time ACTO VISIT FOR AUDIT OF VAT .
Explain different functions of internal audit?
How to do an internal audit effectively?
central exices
Explain how to do an internal audit effectively?
What is audit trail in siebel?
Do you know the different types of audits?
purchase price of property purchased within last 3 years is to be relied upon not and not on revalued amount for the purpose of loan against properties.
Why you want to be a auditor?
How do you feel u contributed to its effectiveness?