Answer:
Given" sold goods costing 20000 to sunil at a profit of 20% on sale less 20% trade discont and paid cartage 150"
There are two Transactions in the question...
First transaction a two accounts... Sales account (Goods are sold)... Sunil account (Goods are sold to Sunil on credit)
Second Transaction Affects two accounts.. Cartage (carriage outwards) account...cash account (cartage paid by cash)..
Trade Discount is not recorded in the books of accounts unlike cash Discount..it is deducted from the List price of that product and the Net price is considered to be the historical price of that product.....
Given Cost Price = 20000
Profit rate = 20%
Profit Cost Price x Profit rate
= 20000 × 20 % = 4000
List Price Cost Price + Profit
= 20000 + 4000 =24000Trade Discount amount= List price > Trade Discount rate..
=24000 × 20% = 4800
Actual Sale Price List Price - Trade Discount
amount
=24000 - 4800 19200
The Three golden rules of accounting are
Personal account - Debit the receiver credit the giver
Nominal account - Debit All expenses and
losses, credit All incomes and gains
Real account Debit what comes in, credit what goes out
Sunil account is a Personal account..(Debtor)
Cash account is a real account ..(all assets and Liabilities come under Real account.. cash is a real account)
cartage account is a nominal account...(all expenses incomes gains losses come under nominal account.. cartage is an expense)
in contention with the above rules...The Journal entries will be...Personal account - Debit the receiver credit the giver
Nominal account - Debit All expenses and losses, credit All incomes and gains
Real account - Debit what comes in, credit
what goes out
Sunil account is a Personal account..(Debtor)
Cash account is a real account ..(all assets and Liabilities come under Real account.. cash is a real account)
cartage account is a nominal account...(all
expenses incomes gains losses come under nominal account.. cartage is an expense)
in contention with the above rules...The
Journal entries will be...
Sunil a/c Dr 19200
To Sales a/c 19200
(Being Goods Sold to Sunil)
Cartage a/c Dr 150
To cash a/c
(Being Cartage paid)
Explanation:
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