Bought goods of the list price of 6000 from khanna bro. less 15 percent trade disc. and 2 percent cash disc. and paid 40 percent price at the same time.
Rajeev Kushwaha from India
We do not record the trade discount. We just deduct the trade discount and then we pass the voucher entry. In your question Rs. 6000 is the list price, we will deduct the trade discount of 15% from Rs. 6000.
Less trade discount 15%
Cash discount on the cash received. We just received 40% of total purchase price. Purchase price is Rs. 5100, its 40% is 2040 and its 2%, we have received as cash discount. So, following entry will be passed.
Purchase Account Dr. 5100
Cash Account Cr. 1999.20
Khanna Br. (Creditor) Account Cr. 3060
Discount Received Account Cr. 40.8