Cash discount entries

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 October 2012 suppose ram has sold goods to sham on credit or rs 50000 and it is the term of agreement. if sham pays within 20 days of this purchase,he can receive 10% discount.If sham pays within 2 days then treat cash discount in day book of both parties.

Plz give journal entries for both the parties..?

CA Pooja Agarwal

CA Pooja Agarwal (Expert)
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19 October 2012 in the books of seller

discount allowed..dr
to debtor A/c

in the books of buyer

CREDITOR A/C...DR
TO DISCOUNT RECEIVED A/C

THIS ENTRIES ARE FOR CASH DISCOUNT

BUT THE QUESTION YOU HAVE MENTIONED IS OF TRADE DISCOUNT AND THERE IS NO ENTRY FOR TRADE DISCOUNT

Gajendra R. Tiwari

Gajendra R. Tiwari (Expert)
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19 October 2012 In the books of Ram:

1)on Sale:
Shyam's A/c ...........dr 50,000
to Sales A/c 50,000

2)on payment recd:
Bank A/c...............dr. 45,000
Discount A/c...........dr. 5,000
to Shyam's A/c 50,000

In the books of Shyam:

1)on purchase:
purchases a/c..........dr. 50,000
to Ram's A/c 50,000

2)on payment made:
Ram's A/c..............dr. 50,000
to Bank A/c 45,000
to Discount a/c 5,000