Question No 20 Chapter No 8 - T.S. Grewal 11 Class

Question No 20 Chapter No 8

M/s Auto Help, Delhi Purchased 500pieces of motor cycle horns at Rs 100 each plus IGST @ 12% from M/s G.S. Auto, Ghaziabad,(UP). Trade terms settled were: Trade discount will be allowed @ 10% and Cash Discount @ 5% if payment is made within 7 days. M/s Auto Help made the payment after 30 days. Determine the amount of Trade Discount and Cash discount. 

Solution of Question No 20 Chapter No 8: - 

Gross Purchase Price = 500*100
= 50,000/-

Tarde Discount = Purchase Price * % of discount
= 50,000 * 10%
= 5,000/-

Net Purchase Price = Gross Purchase Price - Discount
= 50,000 – 5,000
= 45,000/-

Amount of IGST = Net Purchase Price * % of IGST
= 45,000* 12%
= 5,400/-

Invoice Value = Net Purchase Price + IGST
= 45,000 + 5,400
= 50,400/-

Cash Discount = The amount of Cash discount is zero because there was a condition in the deal about availing cash discount. It is shown below: 

• If payment is made within 7 Days. 

M/s Auto help, Delhi did not fulfil the condition because they make payment after 30 days.  

In the Books of Rahman 

Date	Particulars		L.F.	Debit	Credit
	Purchase A/c	Dr.		45,000
	Input IGST A/c	Dr.		5,400
	To M/s G.S. Auto A/c				50,400
	(Being Purchase goods from M/s G.S Auto)
After 30 Days	M/s G.S. Auto A/c	Dr.		50,400
	To Cash A/c				50,400
	(Being payment made to M/s G.S Auto)

Explanation of All Transactions with images: -

This is not a part of the solution, So you don't have to write it in the exam. So, why we explained if it is not needed. Because This explanation will help you to understand all transactions with logic and you don't need to remember all the transactions but just understand and remember the logic use behind it.

Transaction No. 1

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Purchase (Goods)	Assets	Real Account	Goods received by business	Goods comes in	Debit
IGST Input A/c	Expenses	Nominal Account	Tax collected from buyer	All Expenses and losses	Debit
M/s G.S. Auto	A/Person	Personal Account	Goods given	They are Giver	Credit

Transaction No. 2

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
M/s G.S. Auto.	A/Person	Personal Account	Receiving  payment	They are Receiver	Debit
Cash	Assets	Real Account	Payment made in cash	Cash goes out	Credit

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Check also Question No 17 Chapter No 8 - T.S. Grewal 11 Class

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