Question No 25 Chapter No 8 – T.S. Grewal 11 Class

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. Debit Credit
  Purchase A/c Dr.   1,08,000  
  IGST Input A/c Dr.   12,960  
             To Hero cycles, ludhiana A/c     1,20,960
  (Being goods purchased from M/s hero cycles, ludhiana. )      
         
  Hero cycles, ludhianaA/c Dr.   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/c Dr.   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 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 Hero cycles, ludhiana  A/Person   Personal Account  Goods given They are Giver Credit

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 Account Type of Account Rule which will Applicable What happen in the transaction Rule applied According to Rule It will be
Hero cycles, Ludhiana  Person   Personal Account  Goods received  He is  receiver Debit
Purchase Return a/c (Goods)   Assets   Real Account   Goods giving by Business Goods Goes out Credit 
IGST Output A/c  Income Nominal Account Tax 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 Account Type of Account Rule which will Applicable What happen in the transaction Rule applied According to Rule It will be
Hero cycles, ludhiana. 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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T.S. Grewals Double Entry Book Keeping - Question No 25 Chapter No 8 - T.S. Grewal 11 Class

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