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?

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Solution

Note: Cash discount received is an income and is credited to the discount received account.

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Record the following transactions in purchase return book

(i) 2 Banarsi sarees @ Rs 2,000 each and 2 Kanjivaram sarees @ Rs 12,500 each were bought from Neema Mills, trade discount on all items @ $20 %$ . However, on delivary these sarees were found defective and were returned back with debit note no.03/2016.

(ii) Returned to Payal Mills ,Surat -5 polyster sarees @ Rs 200 each

Trade discount @ $10 %$ (Debit Note No.101)

(iii) Garg Mills, Kota accepted the returns of goods (which were purchased for cash) from us, 5 Kota sarees @ Rs 80. (Debit Note No.102)

(iv) Returned to Mittal Mills, Bangalore, 5 Silk sarees @ Rs 520 each

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(v) Returned one typewriter (being defective) @ Rs 7,000 to Bansal & Co

Also prepare purchase return account and Neema Mills account.

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