Rebello purchased from Rs.100 each on which he is given 20% Trade Discount. He is further given 2% Cash Discount as he made payment for the purchases immediately. Calculate the amount that Rebello will debit in purchases account. Pass necessary journal entries for the following transaction.

Asked by Topperlearning User | 4th Jul, 2016, 12:36: PM

Expert Answer:

Rebello will debit Rs.48,000 to Purchases Account i.e, the amount of Purchases after Trade Discount. Cash Discount received is credited to Discount Received Account.   

Journal

Date

Particulars

 

L.F.

Dr.Rs. 

Cr.Rs. 

 

Purchases A/c

            To Cash A/c

            To Discount received A/c

(Being the purchases made from Bhavya 600 items @ Rs.100 each at Trade Discount of 20% and 2% cash discount )

Dr.

 

48,000

 

47,040

960

 

 

 

Answered by  | 4th Jul, 2016, 02:36: PM