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

Question No. 20 - Chapter No.8 - T.S. Grewal +1 Book 2019

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

Transaction No. 1 Question No.20 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 20 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 1 Question No.20 – Chapter No.8 – T.S. Grewal +1 Book 2019
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

Transaction No. 2 Question No.20 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 20 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 2 Question No.20 – Chapter No.8 – T.S. Grewal +1 Book 2019
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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