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 Audit interview questions  Audit Interview Questions (422)
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 Accounting General interview questions  Accounting General Interview Questions (2781)
 Accounting AllOther interview questions  Accounting AllOther Interview Questions (4351)
Question
what is the difference between cash discount and trade
discount. 

what is the journal entry for purchase of 100000 giving 
(a) 5% trade discount 
(b) 5% cash discount.
 Question Submitted By :: Ansari
I also faced this Question!!     Rank Answer Posted By  
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 1
CASH DISCOUNT IS NEVER SHOWN IN THE JOURNAL ENTRY BUT TRADE
DISCOUNT IS SHOWN IN THE JOURNAL ENTRY.

(A)5% TRADE DISCOUNT

PURCHASE A/C DR. 9500
DISCOUNT RECEIVED DR. 500
TO CASH A/C CR.10,000
(BEING GOODS PURCHASE WITH TRADE DISCOUNT)

(B) 5% CASH DISCOUNT

PURCHASE A/C DR. 9500
TO CASH A/C CR.9500
(BEING GOODS PURCHASED)
 
Is This Answer Correct ?    57 Yes 151 No
Pranjal
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 2
in case of trade discount
purchase a/c dr.........100000
to, discount a/c................5000
to, cash a/c...................95000

in case of cash discount
purchase a/c dr............95000
to, cash a/c....................95000
 
Is This Answer Correct ?    66 Yes 71 No
Yash
 
 
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 3
Trade Discount is the discount provided on bulk purchases
and generally trade discount is not shown in the books of
accounts the entry for purchase of 10,000 5% trade
discount is
Purchase A/c....Dr 9500
To Sundry Debtor/cash/bank A/c. 9500

Cash Discount is the discount provided for payments made
before due date and for cash purchases and this is gain to
the company and is shown in the books of accounts and the
entry will be
Purchase A/c....Dr 10000
To Discount Received A/c 500
To cash A/c 9500
 
Is This Answer Correct ?    120 Yes 12 No
Chanti
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 4
Trade Discount is the discount provided on bulk purchases
and generally trade discount is not shown in the books of
accounts the entry for purchase of 10,000 5% trade
discount is
Purchase A/c....Dr 9500
To Sundry creditor/cash/bank A/c. 9500

Cash Discount is the discount provided for payments made
before due date and for cash purchases and this is gain to
the company and is shown in the books of accounts and the
entry will be
Purchase A/c....Dr 10000
To Discount Received A/c 500
To cash A/c 9500
 
Is This Answer Correct ?    45 Yes 12 No
Chantihyd
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 5
Trade discount is given at the time of selling goods but
cash discount is given to collect balance quicly.Entry for
this transaction will be
Purchase A/C Dr. 9500
Discount A/C 475
Cash/Bank A/c 9025
 
Is This Answer Correct ?    22 Yes 26 No
Jitendra Kumar Mishra
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 6
trade discount is given on the bulk purchase of the goods .
the entry for trade dist. is never passed in the books of
a/c.cash dist. is given for prompt payment of cash
the entry in the books of the purchaser :
Purchase A/C Dr. 9500
Discount A/C 475
Cash/Bank A/c 9025
 
Is This Answer Correct ?    18 Yes 10 No
Hitesh Jain
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 7
Trade discount is not shown in accounting books but still it
is calculated and subtracted from the principle amount and
the remaining amount (result) becomes the principle amt at
which cash discount would be calculated and shown in the
accounting books:
Sol:
Given: Goods sold @100000
Therefore, TD= 100000*(5/100)=5000
Selling price= Principle amt - TD
= 100000 - 5000
= 95000
Now, CD would be applied on the above answer, i.e on 95000
Therefore CD = 95000 * (5/100)
= 4750
Cash Received = 95000 - 4750
= 90250
Journal Entries:
Purchase Goods A/C Dr 95000
---- To Cash A/C 90250
---- To Discount Received 4750

Hope the answer is right
 
Is This Answer Correct ?    33 Yes 7 No
Imran Malik
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 8
Trade Discount is the deduction granted by supplier towards
business consideration to increase the sales with bulk
qualtity of goods/services. Trade discount will never be
recorded in books of accounts, since it is given on invoice
copy. Trade discount is given to promote the sales.
The Cash Discount is the reduction granted by supplier for
encourage the prompt or Immediate payment.
The details are as follows.....
Total sales = 100000
Trade discount = 5% on 100000 = 100000*5/100 = 5000
The actual sales = 100000-5000 = 95000.
Cash Discount is 5% on 95000 = 95000*5/100 = 4750.
Now the entry for cash discount is: -

Purchases a/c DR 95000,
To Discount received a/c 4750,
To Cash/Bank a/c 90250.
(Being cash Discount received from purchaser)
 
Is This Answer Correct ?    19 Yes 2 No
Kasi Reddy
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 9
TD FOR INCRASE SALES BUT CD FOR RECEIVED PAYMENT EARLY 
Is This Answer Correct ?    9 Yes 3 No
Sohanbeer Singh
 
  Re: what is the difference between cash discount and trade discount. what is the journal entry for purchase of 100000 giving (a) 5% trade discount (b) 5% cash discount.
Answer
# 10
Purchase A/c Dr. 9025
Discount Received A/c Dr. 425
To Cash A/c 9500



NOTE:- Trade discount is not shown in books ,Only amount of trade discount is deducted out of total amt.
 
Is This Answer Correct ?    3 Yes 9 No
Jyoti
 

 
 
 
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