# Question No 17 Chapter No 8 – T.S. Grewal 11 Class

Question No. 17 - Chapter No.8 - T.S. Grewal +1 Book 2019

Question No 17 Chapter No 8

M/s Vaish Trader, Delhi purchased 500 Parker Pens @ Rs 200 each less trade Discount @ 15% from luxor Pens Ltd., Delhi. CGST and SGST was levied @ 6% each. Further, Cash discount was allowed @5% as the payment was made within specific time. What will be the amount of trade discount and cash discount?

Solution: –

Gross Purchase Price = 500*200
= 1,00,000/-

Trade Discount = Purchase Price * % of discount
= 1,00,000 * 15%
= 15,000/-

Net Purchase Price = Gross Purchase Price – Discount
= 1,00,000 – 15,000
= 85,000/-

Amount of CGST = Net Purchase Price * % of CGST
= 85,000* 6%
= 5,100/-

Amount of SGST = Net Purchase Price * % of SGST
= 85,000* 6%
= 5,100/-

Invoice Value = Net Purchase Price + CGST + SGST
= 85,000 + 5,100 + 5,100
= 95,200/-

Cash Discount = Invoice Value * % of Discount
= 95,200 * 5%
= 4,760/-

Cash discount always availed at the time of payment and trade discount is availed at the time of dealing/trading/ Negotiation. So, in this question, we can avail cash discount when payment is made within a specific time limit.

In the Books of M/s Vaish Trader, Delhi

 Date Particulars L.F. Debit Credit Purchase A/c Dr. 85,000 CGST Input A/c Dr. 5,100 SGST Input A/c Dr. 5,100 To Luxor Pens Ltd. A/c 95,200 (Being goods purchased from M/s Luxor Pens Ltd. ) M/s Luxor Pens Ltd A/c Dr. 95,200 To Cash  A/c 90,440 To Discount Received A/c 4,760 (Being payment made to M/s Luxor Pens Ltd. and receive discount)

### 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 CGST Input A/c Expenses Nominal Account Tax collected from buyer All Expenses and losses Debit SGST Input A/c Expenses Nominal Account Tax collected from buyer All Expenses and losses Debit M/s Luxor Pens Ltd. 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 Luxor Pens Ltd. A/Person Personal Account Receiving  payment They are Receiver Debit Cash Assets Real Account Payment made in cash Cash goes out Credit Discount Received gain Nominal Account Discount received All income and gains Credit

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