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.
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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 ? | 149 Yes | 16 No |
Answer / chantihyd
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 ? | 55 Yes | 16 No |
Answer / imran malik
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 ? | 41 Yes | 9 No |
Answer / kasi reddy
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 ? | 23 Yes | 4 No |
Answer / sreejith as
At The time of purchase (@5% Trade Discount)
Purchase A/c.... Dr 9500
To Sundry Creditors A/c 9500
At The Time Of Payment Before Due (@5% Cash Discount).
Sundry Creditors A/c Dr. 9500
To Discount Received A/c 475
To Cash 9025
| Is This Answer Correct ? | 10 Yes | 0 No |
Answer / hitesh jain
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 ? | 21 Yes | 12 No |
Answer / puja
cash discount is given to the debtor with the aim to get
payment fastly whereas trade discount is given with the aim
ot purchase at high quantity
| Is This Answer Correct ? | 8 Yes | 0 No |
Answer / sohanbeer singh
TD FOR INCRASE SALES BUT CD FOR RECEIVED PAYMENT EARLY
| Is This Answer Correct ? | 9 Yes | 4 No |
Answer / aman chhabra
let me explain u ..
Trade Discount is the discount provided on bulk purchases or at the tym of purchase.
and generally trade discount is not shown in the books of accounts.
now the entry at the tym of purchase 1,00,000.
without trade discount.
Purchase A/c....Dr 100000
To vendor A/c cr 100000
and now at the tym of 5% trade discount the entry would be
Purchase A/c....Dr 95,000
To vendor A/c cr 95,000
nw see that genreally trade discount is not shown in books of account.
only amount will be effected.
Cash Discount is the discount provided for payments made
before due date and for cash purchases and this is gain and
the company is shown in the books of accounts.
so nw we to pay to vendor 90500
and cash discount received is 5 %
so the entry will be
vendor A/c....Dr 95,000
To Discount Received A/c 4,750
To cash A/c 90,250.
nw the payment made to vendor is Rs 90,250.
| Is This Answer Correct ? | 5 Yes | 0 No |
Answer / sreejith as
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
At The time of purchase
Purchase A/c.... Dr 10000
To Sundry Creditors A/c 10000
At The Time Of Payment Before Due.
Sundry Creditors A/c Dr. 10000
To Discount Received A/c 500
To Cash 9500
| Is This Answer Correct ? | 6 Yes | 3 No |
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