Answer Posted / pradeep
cash discount is an discount given by the suppliers to the purchaser,when purchaser have ready to pay full amount of credit purchase money at single time.
e.g:- a purchaser have to pay 1000 Rs to his supplier with in 1 month(1-01-2000 to 31-01-2000). but purchaser ready to pay that amount in 15-01-2000.so because of his early payment supplier his ready to give cash discount of 100 Rs to purchaser.
Journal entry:
Supplier a/c Dr 900
Cash discount a/c Dr 100
To cash a/c 1000
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