Your company sold goods to ABC Co for $3,200 less trade discount of 10% and cash discount of 5% for payment within 15 days. The invoice was settled by cheque five days later.
Make entries to record both of these transactions ?
Answer
| $ | ||
| Sales price | 3,200 | |
| Less: 10% trade discount | 320 | |
| Sale | 2,880 | |
| Cash discount 5% | Discount allowed | 144 |
| Cash payment | Bank | 2,736 |
| 2,880 |
Journal Entry
Sale
Dr. trade receivable………….2,880
Cr. Sale………………………………………… 2,880
Payment
Dr. Bank…………………………… 2,736
Dr. Discount allowed……….. 144
Cr. Trade receivable………………………2,880