Question No. 25 - Chapter No.8 - T.S. Grewal +1 Book 2019

Question No 25 Chapter No 8

Mittal Cycles purchased 100 cycles from hero cycles, ludhiana(Punjab) @ Rs 1,200 per cycle plus IGST @ 12%. Hero Cycles allowed 10% Trade Discount and 3% Cash Discount, if payment is made within 14 days. Mittal Cycles Received 10 Cycles damaged during transit, which it returned. Mittal Cycles settled the payment in 10 days time.

Pass Journal entries for the above transactions. 

Solution of Question No 25 Chapter No 8: – 

Gross Purchase Price = 100*1200
= 1,20,000/-

Trade Discount = Purchase Price * % of discount
= 1,20,000 * 10%
= 12,000/-

Net Purchase Price = Gross Purchase Price – Discount
= 1,20,000 – 12,000
= 1,08,000/-

Amount of IGST = Net Purchase Price * % of IGST
= 1,08,000* 12%
= 12,960/-

Invoice Value = Net Purchase Price + IGST
= 1,08,000 + 12,960
= 1,20,960/-

Purchase Return = 10*1200
=12,000/-

Trade Discount = Purchase Return Price * % of discount
= 12,000 * 10%
= 1,200/-

Net Purchase Return Price = Gross Purchase Return Price – Discount
= 12,000 – 1,200
= 10800/-

Amount of IGST on Purchase Return = Net Purchase Return Price * % of IGST
= 10,800 * 12%
= 1,296/-

Total Purchase Return Value = Net Purchase Return Price + IGST
= 10,800 + 1,296
= 12,096/-

So, Payable Amount = 120960 – 12,096
= 108,864/-

Cash Discount = Invoice Value * % of Discount
= 108,864 * 3%
= 3,266/-

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. 1,08,000 
 IGST Input A/cDr. 12,960 
            To Hero cycles, ludhiana A/c  1,20,960
 (Being goods purchased from M/s hero cycles, ludhiana. )   
     
 Hero cycles, ludhianaA/cDr. 12,096 
            To Purchase Return A/c  10,800
            To Input IGST  A/c  1,296
 (Being goods returned to M/s Hero cycles, ludhiana. )   
     
 M/s Hero cycles, ludhiana A/cDr. 108,864 
           To Cash  A/c   1,05,598
           To Discount Received A/c   3,266
 (Being payment made to M/s Hero cycles, ludhiana. 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.25 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 25 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 1 Question No.25 – 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
IGST Input A/c ExpensesNominal AccountTax collected from buyer All Expenses and lossesDebit 
M/s Hero cycles, ludhiana A/Person  Personal Account Goods givenThey are GiverCredit

Transaction No. 2

Transaction No. 2 Question No.25 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 25 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 2 Question No.25 – 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
Hero cycles, Ludhiana Person  Personal Account Goods received He is  receiverDebit
Purchase Return a/c (Goods)  Assets  Real Account  Goods giving by BusinessGoods Goes outCredit 
IGST Output A/c IncomeNominal AccountTax collected from buyer All income and gains Credit 

Transaction No. 3

Transaction No. 3 Question No.25 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 25 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 3 Question No.25 – 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
Hero cycles, ludhiana.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. Grewals Double Entry Book Keeping - Question No 25 Chapter No 8 - T.S. Grewal 11 Class

T.S. Grewal’s Double Entry Book Keeping

 

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