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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 - T.S. Grewal +1 Book 2019

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Question No 17 Chapter No 8

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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/-

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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/-

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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.DebitCredit
 Purchase A/cDr. 85,000 
 CGST Input A/cDr. 5,100 
 SGST Input A/cDr. 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/cDr. 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

Transaction No. 1 Question No.17 - Chapter No.8 - T.S. Grewal +1 Book 2019
Transaction No. 1 Question No.17 – Chapter No.8 – T.S. Grewal +1 Book 2019
Name of AccountType of AccountRule which will ApplicableWhat happen in the transactionRule appliedAccording to Rule It will be
Purchase (Goods)  Assets  Real Account  Goods received by businessGoods comes in Debit
CGST Input A/c ExpensesNominal AccountTax collected from buyer All Expenses and lossesDebit 
SGST Input A/c ExpensesNominal AccountTax collected from buyer All Expenses and lossesDebit 
M/s Luxor Pens Ltd. A/Person  Personal Account Goods givenThey are GiverCredit

Transaction No. 2

Transaction No. 2 Question No.17 - Chapter No.8 - T.S. Grewal +1 Book 2019
Transaction No. 2 Question No.17 – Chapter No.8 – T.S. Grewal +1 Book 2019
Name of AccountType of AccountRule which will ApplicableWhat happen in the transactionRule appliedAccording to Rule It will be
Luxor Pens Ltd.A/PersonPersonal AccountReceiving  paymentThey are ReceiverDebit
 CashAssets Real AccountPayment made in cashCash goes outCredit
Discount Received gainNominal AccountDiscount receivedAll income and gainsCredit

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T.S. Grewal's Double Entry Book Keeping

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