Cash Discount & Trade Discount

Q.

Give Journal entries for the following:

(i) Bought goods at the list price of Rs.50, 000 from Vinod less 20% trade discount and 2% cash discount and paid 40% by cheque.

(ii) Sold goods to Mohan at list price Rs.1, 00, 000 less 20% trade discount and 2% cash discount and paid 50% by cheque.

(iii) Paid income tax through cheque Rs.2, 000.

Q.

Sold goods for cash of Rs 4000 on 10% Trade discount & 10% cash discount. Posting in discount account will be?

1. Rs 740 on debit side

2. Rs 360 on debit side

3. Rs 360 on credit side

4. None of the above

Q.

Journalise the following transactions in the journal of shri padukone.
(i) Paid cash to Anil 2, 400
and discount received from Him 100
(ii) Received cash from Vijay 1, 225
and discount allowed to him 25
(iii) Goods sold to Ravish 7, 500
Ravish returned goods 500
Received cash from Ravish Rs. 6, 875 in full settlement of his account.
(iv) sold goods to Rohan of the list price of Rs. 15, 000 at 10% trade discount.
(v) Purchased goods from Bindu of the list price of 5, 000 at 15% trade discount.
(vi) Purchased fruniture worth Rs. 20, 000 and tools worth Rs. 4, 000.
(vii) Paid to Nishant out of business funds for repair fo shri padukone's House Rs. 8, 000.
(viii) Supplied goods costing Rs. 12, 000 to Peter, issued invoice at 10% above cost less 5% trade discount.

Q.

Trade discount is shown in the journal entry. This statement is ___ .

1. True

2. None of the above

3. False

4. Depends on case to case

Q.

What are the two types of discounts?

Q. A discount given at the time of sale as a deduction from the selling price is called as .

1. cash discount
2. trade discount
3. credit discount
4. discount received

Q.

Why is the trade discount given?

Q.

What is trade discount and cash discount?

Q.

Enter the following transactions of M/s Ketan in Purchase Book, Sales Book, Purchase Returns Book and Sales Returns Book.

2011 March
1	Sold goods to Sudha Stores Rs 29, 000 at 10% trade discount.
3	Purchased goods from Meghdoot Traders Rs 37, 350 and paid carriage Rs 150.
6	Sudha Stores returned goods of Rs 3, 220 (Net).
10	Cash purchases Rs 18, 600 and Cash Sales Rs 61, 000.
13	Jayesh invoiced goods to us as per our order placed on 28th Feb. 2011 Rs 27, 000.
17	Sold goods worth Rs 33, 400 to Nandini at 10% trade discount.
20	Returned goods to Jayesh Rs 2, 850 as they were defective.
22	Credit purchases from Micky Traders Rs 19, 450 and they allowed a trade discount of Rs 150.
23	Nandini returned goods of Rs 1, 900 (Gross) as they were damaged.
26	Purchased office furniture on credit from Suhani Furniture Mart Rs 55, 000.
29	Purchased goods from Garima Stores for Rs 8, 000 and sold the same to Anita at 25% profit on cost.
31	Sent a debit note to Micky Traders for Rs 3, 200

Q.

What is the difference between the trade discount and cash discount?

Q.

Kanchan Sold 40 air conditioners to XYZ Ltd. @ Rs. 25, 000 each less 25% trade discount and 2% cash discount if payment is made within 15 day. XYZ Ltd paid the amount within 14 days. What will be the amount the Kanchan should credit to the sales account?

Q.

Record the following transactions in Purchase Book, Sales Book, Purchase Returns Book and Sales Returns Book of Tushar General Stores for the month of May 2011.

2011 May
1	Jaya invoiced goods of Rs 15, 000 at 9% trade discount as per their Invoice number 231.
3	Purchased computer from IBM Computers worth Rs 55, 000 as per their Invoice number 863.
4	Invoiced goods to Priya for Rs 20, 000 at 4̳½ % trade discount as per Invoice number 341.
7	Sold goods to Sneha for Rs 14, 500 at 10% trade discount as per Invoice number 342.
12	Priya returned goods worth Rs 3, 500 for which we issued Credit Note Not 78. (Gross).
15	Goods worth Rs 3, 500 returned to Jaya and issued Debit Note No. 94.
17	Sold a part of old machinery to Vipin on credit for Rs 29, 800.
20	Sold goods to Anita for Rs 26, 650 as per Invoice number 343 and purchased goods from her for Rs 12, 250 as per their Invoice number 545.
22	Kailas Traders purchased goods from us Rs 16, 000 at 6% trade discount as per the Invoice number 344.
24	Satya supplied goods to us of Rs 2, 450 Invoice number 630.
27	Kails Traders returned goods to us of Rs 5, 180 (Net) and we issued a Credit Note No. 79.
29	Returned goods worth Rs 460 to Satya and issued Debit Note No. 95.

Q.

What is a car cash discount?

Q.

Vishal purchased from Karan Sports Ltd. 200 balls @ Rs. 50 each on which he is given a 20% trade discount. He is further given a 2% cash discount as he made payment for the purchases immediately. Determine the amount that Vishal will debit to the purchase account?

Q.

What do you understand by trade discount and cash discount?

Q.

Enter the following transactions in the Purchase Book, Sales Book, Purchase Returns Book and Sales Returns Book of Abhishek and Co. for the month of January, 2011.

2011 Jan.
1	Purchased goods from Raj Traders Rs 16, 400 at 10% trade discount.
3	Preeti enterprises invoiced goods to us Rs 17, 250.
6	Sold goods to Vinita Stores Rs 19, 000 at 5% trade discount.
9	Mitesh Associates invoiced goods to us Rs 17, 000 at 2½ trade discount.
12	Returned goods to Raj traders Rs 1, 650 (Net).
15	Vinita Traders returned goods to us as they were damaged in transit Rs 4, 000 (Gross).
18	Returned goods to Preeti Rs 2, 550
23	Placed an order with Novel Stores for goods worth Rs 29, 000.
25	Novel Stores supplied goods worth Rs 19, 000 only
26	Returned goods to Novel Stores as they were not as per specification Rs 2, 550.
28	Sold goods to Deepika Rs 24, 000 at 8% trade discount.
30	Deepika returned goods of Rs 4, 000 (Gross).

Q.

When a discount is given at the time of sale as a deduction from sale price, it is called as :

1. Cash Discount

2. Trade Discount

3. None of these

4. Either A or B

Q. When a discount is given to speed up payments from the customers, it is called as .

1. cash discount
2. trade discount
3. credit discount
4. discount received

Q.

The discount that is given to speed up payments from the customers is called as _________.

1. Cash Discount

2. Trade Discount

3. Either A or B

4. None of these

Q. Rebate on bills discounted is shown in the Balance Sheet as _______.

1. Other liabilities and provisions
2. Reserves & surplus
3. Advances
4. Other income

Q. Which of the following services provided by a bank in India is not liable for Service Tax as per existing laws?

1. Safe Deposit Lockers
2. Discount earned on certain discounted bills
3. Credit cards
4. Merchant Banking Services

Q. Trade Discount is not recorded in the books.

1. True
2. False

Q. Answer in one sentence only.
Which discount is not recorded in the books of account?

Q. Question