Discount received is the gain of business. If we will pay our creditor before the time, we will earn discount. One side it is the part of our earning, second, we can fastly pay our creditor due to this motive. So, we received the discount, we pass following journal entry.
Suppose Sham has bought goods from Ram on Credit of Rs. 50000 on 1st jan. 2014 and it is the term of agreement that if Sham pays within 20 day of this purchase, he can receive 10% discount. Sham paid on 17th Jan. 2014 then Treat discount received in day book of Sham.
Day book of Sham
Suppose Sham has bought goods from Ram on Credit of Rs. 50000 on 1st jan. 2014 and it is the term of agreement that if Sham pays within 20 day of this purchase, he can receive 10% discount. Sham paid on 17th Jan. 2014 then Treat discount received in day book of Sham.
1st Jan. 2014
Purchase Account Dr. 50000
Ram Account Cr. 50000
17th Jan. 2014
Ram Account Dr. 50000
Bank Account Cr. 45000
Discount Received Account Cr. 5000
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