Question
What is Trade Discount? Give an example.
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Answer
When discount ia allowed by seller to its customers at a fixed percentage on the list price of the goods it is called trade discount. It is not recorded in the books of accounts as it is deducted in the invoice itself from the gross value of goods.
Example: If a trader sells goods of the list price of ₹ 15000 at 20% trade discount to Ram. The following entry will be made:
Example: If a trader sells goods of the list price of ₹ 15000 at 20% trade discount to Ram. The following entry will be made:
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Asha sold goods worth ₹ 19,000 to Nisha on March 2, 2016. ₹ 4,000 were paid by Nisha immediately and for the balance she accepted a bill of exchange drawn upon her by Asha payable after three months. Asha discounted the bill immediately with her bank @ 10% p.a. On the due date Nisha dishonoured the bill and the bank paid ₹ 30 as noting charges.
On 5th June, Nisha paid ₹ 3,030 (including noting charges) in cash and accepted a new bill at one month for the amount due to Asha together with interest @ 15% p.a. Record the necessary journal entries in the books of Asha and Nisha.
On 5th June, Nisha paid ₹ 3,030 (including noting charges) in cash and accepted a new bill at one month for the amount due to Asha together with interest @ 15% p.a. Record the necessary journal entries in the books of Asha and Nisha.
R & Co. paid professional fee to Ram, an advocate. If applicable rate of CGST and SGST is $6 \%$ each, pass the Journal entry for payment of CGST and SGST.
→Elucidate the following statement:
Cash Book is both Journal and Ledger'.
Cash Book is both Journal and Ledger'.
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Name and describe the various books of original entrie.
Enter the following transactions in a Double Column Cash Book and Journal Proper and post them into Ledger∶
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May 1
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Balance of Cash in Hand ₹ 12,400; Bank Overdraft ₹ 36,000
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May 3
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Direct deposit by Mr. Ganesh in our bank account ₹ 10,000. Discount allowed ₹ 200
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May 5
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Issued a cheque of ₹ 7,700 to Mr. Suresh in full settlement of his account of ₹ 8,000
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May 6
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Received a cheque from X for ₹ 12,000. Discount allowed ₹ 500. This cheque was deposited into bank on 7th May
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May 8
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Received Cash ₹ 22,000 and cheque of ₹ 8,000 for cash sale
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May 12
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Cash sale ₹ 70,000 of which ₹ 55,000 banked
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May 15
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Cheque received on 8th May endorsed to Mr. Sunil. Discount received ₹ 150
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May 20
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Discounted a B/R of ₹ 10,000 at 1% through bank
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May 24
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Cheque received from X dishonoured, Bank debits ₹ 20 in respect of bank charges
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May 25
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Purchased goods for ₹ 50,000 at a trade discount of 10%. Payment was made in cash
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May 26
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Withdrew from bank ₹ 10,000 for office use and ₹ 2,000 for personal use
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May 31
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Interest debited by Bank ₹ 4,500
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