2018 August
1. Purchased goods of Rs. 90,000 at 10% Trade Discount and 10% Cash Discount from Rakesh and 1/3rd amount paid by cheque.
5. Opened current account in State Bank of India by depositing Rs. 60,000.
8. Cash Purchases Rs. 85,000.
10. Goods sold on credit to Tushar Rs. 20,000 @10% Trade Discount.
12. Paid Salary Rs. 4,000.
16. Tushar returned goods of Rs. 250.
17. Goods taken by Kunal for his private use Rs. 2,000.
20. Purchased Laptop of Rs. 40,000 from Joshi Electronics @18% GST and paid by cheque.
22. Rent paid by cheque Rs. 15,000.
25. Purchased Motor car worth Rs. 2,00,000 for cash @18% GST and paid by bank.
26. Goods distributed as free sample Rs. 4,000.
28. Purchased goods from Amit of Rs. 60,000 on credit.
30. Paid by ECS cash to Amit Rs. 58,500, who allowed us discount Rs. 1,500.
30. Sold goods Rs. 5,000 at a loss Rs. 1,000.
31. Sold goods for Rs. 20,000.
In the Books of Kunal Stores.
DATE
PARTICULARS
L/F
DEBIT
CREDIT
2018
Aug,1
Purchase A/c Dr.
To Discount allowed
To Cash A/c
To Bank A/c
[Being Purchased goods at 10% Trade discount and 10% cash discount and 1/3rd amount paid by cheque]
81,000
8,100
24,300
48,600
5
State Bank of India A/c Dr.
To Cash A/c
[Being Opened cash account in state bank of India]
60,000
60,000
8
Purchase A/c Dr.
To cash A/c
[Being cash purchased]
85,000
85,000
10
Tushar A/c Dr.
To sales A/c
[Being sold good to Tushar on credit and allowed 10% trade discount]
18,000
18,000
12
Salary A/c Dr.
To cash A/c
[Being salary paid]
4,000
4,000
16
Sales Return A/c Dr.
To Tushar A/c
[Being goods return from Tushar]
250
250
17
Drawings A/c Dr.
To Goods A/c
[Being Goods taken by Proprietor for private use]
2,000
2,000
20
Laptop A/c Dr.
Input CGST 9% Dr.
Input SGST 9% Dr.
To Bank A/c
[Being purchased laptop from Joshi Electronics @18% GST]
40,000
3,600
3,600
47,200
22
Rent A/c Dr.
To Bank A/c
[Being paid rent by cheque]
15,000
15,000
25
Motor Car A/c Dr.
Input CGST 9% Dr.
Input SGST 9% Dr.
To Bank A/c
[Being purchased motor car @18% GST and amount paid by Bank]
2,00,000
18,000
18,000
2,36,000
26
Advertisement A/c Dr.
To Cash A/c
[Being paid for advertisement]
4,000
4,000
28
Purchase A/c Dr.
To Amit A/c
[Being purchased goods on credit by Amit]
60,000
60,000
30
Amit A/c Dr.
To Discount received
To Bank A/c
[Being paid ECS cash to Amit and allowed discount]
58,500
1,500
57,000
30
Cash A/c Dr.
Loss A/c Dr.
To Sales A/c
[Being sold goods at loss]
4,000
1,000
5,000
31
Cash A/c Dr.
To Sales A/c
[Being Goods Sold]
20,000
20,000
Cash Discount: It is the allowance given by the seller of goods to the purchaser. A discount is a Nominal Account. Nominal Account Rule Says Debit all expenses and loss, Credit all income and gain. Here, Cash discount follows the same Rule. When the seller gave a cash discount, he had a loss of cash and a gain to the purchaser. Therefore, whenever cash discount is allowed, Account should be debited in the books of seller and credited in the books of buyer. It is to be calculated after deduction of Trade Discount. Cash Discount is Shown in the Books of account, whereas Trade Discount is not shown in Books of account but deducted from the value.
Cash discount example
You can understand Cash Discount easily with this Purchase of goods example:
1. Purchased goods at 10% Trade Discount and 10% Cash Discount from Rakesh and 1/3rd amount paid by cheque. Purchase account is Debited and 10% C.D is credited because proprietor is receiving discount from Rakesh. And 1/3rd amount is paid by cheque and the remaining amount will be paid by cash.
5. Opened current account in State Bank of India and deposited 60,000. State bank of India is the receiver therefore it shown on debit side and On Credit Side Cash Account because credit the giver and here proprietor is giving cash to the bank.
8. Cash purchased. Purchase account to Cash account because debit what comes in and credit what goes out by real account formula. Cash is going out and goods coming in.
10. Goods sold on credit to Tushar Rs. 20,000 @10%T.D. Tushar account is debited because Tushar is not paying cash immediately and T.D is not recorded in the books of account and Sale account is credited.
12. Paid salary: Salary is an expense therefore it is debited to debit side and Cash account is credited.
16. Tushar Return Goods. Refer Transaction 10 for solving this transaction. On debit side sales return and on credit side Tushar account because sale of goods is return to us which means proprietor is the receiver and Tushar is the giver.
17. Goods taken from Kunal for private use. Kunal is proprietor therefore when proprietor takes Goods or Cash for private use it is recorded as Drawing account Hence Drawing account is Debited to debit side and Goods account is credited.
20. Purchased Laptop @18% GST and paid by cheque. Purchase account and CGST, SGST is Debited to Debit side. And Bank account is credited because amount is paid by cheque.
22. Rent paid by cheque. Rent is an expense therefore the Rent account is Debited and Bank account is Credited.
25. Purchased Motor car @18% GST and paid by Bank.
On debit side Motor car account because motor car is an Asset for the Business and cash is going out. CGST and SGST because it is an expense. On credit side Bank account.
30. Paid by EGS cash to Amit and allowed us Discount Rs. 1,500.
Amit account Debited because Debit the receiver and Discount is Received to us therefore Credited to credit side [Refer Nominal account] and Bank account is credited because ECG means Electronic Clearing Service.
30. Sold goods at a Loss of Rs. 1,000.
Cash account is debited, and loss account is also debited [Refer nominal account formula]
and sales account is credited.
Calculation: 1. Trade Discount - 90,000 *10/100 = 9,000
Cash Discount - 81,000 *10/100 = 8,100
1/3rd amount by cheque and the remaining by cash.
Cash amount 72,900/3 = 24,300
Bank - 48,600
10. Trade Discount - 20,000 *10/100 = 2,000
20. GST 18% - 40,000 *18/100 = 7,200
CGST 9% - 3,600
SGST 9% - 3,600
25. GST 18% - 2,00,000 *18/100 = 36,000
CGST 9% - 18,000
SGST 9% - 18,000
Gold Rule of Accounting. Personal Account: 1. Debit the Receiver.
2. Credit The Giver.
Real Account: 1. Debit What Comes In.
2. Credit What Goes Out.
Nominal Account: 1. Debit All Expenses and Losses.
2. Credit All Income and Gain.
2018 August
1. Purchased goods of Rs. 90,000 at 10% Trade Discount and 10% Cash Discount from Rakesh and 1/3rd amount paid by cheque.
5. Opened current account in State Bank of India by depositing Rs. 60,000.
8. Cash Purchases Rs. 85,000.
10. Goods sold on credit to Tushar Rs. 20,000 @10% Trade Discount.
12. Paid Salary Rs. 4,000.
16. Tushar returned goods of Rs. 250.
17. Goods taken by Kunal for his private use Rs. 2,000.
20. Purchased Laptop of Rs. 40,000 from Joshi Electronics @18% GST and paid by cheque.
22. Rent paid by cheque Rs. 15,000.
25. Purchased Motor car worth Rs. 2,00,000 for cash @18% GST and paid by bank.
26. Goods distributed as free sample Rs. 4,000.
28. Purchased goods from Amit of Rs. 60,000 on credit.
30. Paid by ECS cash to Amit Rs. 58,500, who allowed us discount Rs. 1,500.
30. Sold goods Rs. 5,000 at a loss Rs. 1,000.
31. Sold goods for Rs. 20,000.
In the Books of Kunal Stores.
DATE | PARTICULARS | L/F | DEBIT | CREDIT |
2018 Aug,1 | Purchase A/c Dr. |
| 81,000 | |
5 | State Bank of India A/c Dr. |
| 60,000 | |
8 | Purchase A/c Dr. |
| 85,000 | |
10 | Tushar A/c Dr. |
| 18,000 | |
12 | Salary A/c Dr. |
| 4,000 | |
16 | Sales Return A/c Dr. |
| 250 | |
17 | Drawings A/c Dr. |
| 2,000 | |
20 | Laptop A/c Dr. |
| 40,000 | |
22 | Rent A/c Dr. |
| 15,000 | |
25 | Motor Car A/c Dr. |
| 2,00,000 18,000 | |
26 | Advertisement A/c Dr. |
| 4,000 | |
28 | Purchase A/c Dr. |
| 60,000 | |
30 | Amit A/c Dr. |
| 58,500 | |
30 | Cash A/c Dr. |
| 4,000 | |
31 | Cash A/c Dr. |
| 20,000 | |
Cash Discount: It is the allowance given by the seller of goods to the purchaser. A discount is a Nominal Account. Nominal Account Rule Says Debit all expenses and loss, Credit all income and gain. Here, Cash discount follows the same Rule. When the seller gave a cash discount, he had a loss of cash and a gain to the purchaser. Therefore, whenever cash discount is allowed, Account should be debited in the books of seller and credited in the books of buyer. It is to be calculated after deduction of Trade Discount. Cash Discount is Shown in the Books of account, whereas Trade Discount is not shown in Books of account but deducted from the value.
Cash discount example
You can understand Cash Discount easily with this Purchase of goods example:
1. Purchased goods at 10% Trade Discount and 10% Cash Discount from Rakesh and 1/3rd amount paid by cheque. Purchase account is Debited and 10% C.D is credited because proprietor is receiving discount from Rakesh. And 1/3rd amount is paid by cheque and the remaining amount will be paid by cash.
5. Opened current account in State Bank of India and deposited 60,000. State bank of India is the receiver therefore it shown on debit side and On Credit Side Cash Account because credit the giver and here proprietor is giving cash to the bank.
8. Cash purchased. Purchase account to Cash account because debit what comes in and credit what goes out by real account formula. Cash is going out and goods coming in.
10. Goods sold on credit to Tushar Rs. 20,000 @10%T.D. Tushar account is debited because Tushar is not paying cash immediately and T.D is not recorded in the books of account and Sale account is credited.
12. Paid salary: Salary is an expense therefore it is debited to debit side and Cash account is credited.
16. Tushar Return Goods. Refer Transaction 10 for solving this transaction. On debit side sales return and on credit side Tushar account because sale of goods is return to us which means proprietor is the receiver and Tushar is the giver.
17. Goods taken from Kunal for private use. Kunal is proprietor therefore when proprietor takes Goods or Cash for private use it is recorded as Drawing account Hence Drawing account is Debited to debit side and Goods account is credited.
20. Purchased Laptop @18% GST and paid by cheque. Purchase account and CGST, SGST is Debited to Debit side. And Bank account is credited because amount is paid by cheque.
22. Rent paid by cheque. Rent is an expense therefore the Rent account is Debited and Bank account is Credited.
25. Purchased Motor car @18% GST and paid by Bank.
On debit side Motor car account because motor car is an Asset for the Business and cash is going out. CGST and SGST because it is an expense. On credit side Bank account.
30. Paid by EGS cash to Amit and allowed us Discount Rs. 1,500.
Amit account Debited because Debit the receiver and Discount is Received to us therefore Credited to credit side [Refer Nominal account] and Bank account is credited because ECG means Electronic Clearing Service.
30. Sold goods at a Loss of Rs. 1,000.
Cash account is debited, and loss account is also debited [Refer nominal account formula]
and sales account is credited.
Calculation:
1. Trade Discount - 90,000 *10/100 = 9,000
Cash Discount - 81,000 *10/100 = 8,100
1/3rd amount by cheque and the remaining by cash.
Cash amount 72,900/3 = 24,300
Bank - 48,600
10. Trade Discount - 20,000 *10/100 = 2,000
20. GST 18% - 40,000 *18/100 = 7,200
CGST 9% - 3,600
SGST 9% - 3,600
25. GST 18% - 2,00,000 *18/100 = 36,000
CGST 9% - 18,000
SGST 9% - 18,000
Gold Rule of Accounting.
Personal Account: 1. Debit the Receiver.
2. Credit The Giver.
Real Account: 1. Debit What Comes In.
2. Credit What Goes Out.
Nominal Account: 1. Debit All Expenses and Losses.
2. Credit All Income and Gain.
Where is tally of the sum
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