Bought
goods frm LL Trading at $1000 less 5% trade discount and 10% cash
discount if paid within 7 days
Theory that you should know.
Trade discount ---->> is given when you buy goods at
Bulk (large amount).
Cash discount --->> is given to encourage buyers to pay
on time or promptly.
To record this entry, you will need to find an entry which is
seven days later. :) That's the gist of this question. If you found
an entry saying that you have paid LL trading after 7 days, you're
entitled for the additional discounts.
If you haven't paid within the seven days, then you're not
entitled to the 10% cash discount. But, you will still get the 5%
trade discount.
You will need to refer to the dates 7 days after this entry.
Proprietor
took 2 boxes of goods worth $160 each for use at his
house
This is classified as drawings. Since the goods is for the
company use, it would be there will be 'lesser' goods to sell after
the owner took out goods.
Drawings a/c increase, Purchase a/c decrease. In your Trial
Balance/Trading account, you'll Minus the purchase figure, and Add
the Drawings.
It will look like:
Opening stock
Add Purchases
Less Drawings
COGAFS
This entry is not required to be recorded in cash book. HOwever,
if the owner withdrew cash for own use, then you'll need to record
in cashbook.
In accounting, when someone purchases goods or equipment, it is
usually known as credit sales (from our point of view) or credit
purchases (from their point of view). It would not be wise to bring
a hugh sum of money to purchase those equipments. They will pay for
the equipment at a later date. Thus those who purchase your
equipment (but pay later) are known as debtors. i.e. they are still
in debt (owe you money). Thus classified as an asset in Balance
Sheet.
=D In credit purchases/sales, no actually cash is involved
upfront.
Mimi
returned 11 units of equipment purchased on Mar
4
Because you didn't state who is the propriator of this company,
I can't tell you how to do the exact debiting and
crediting.
To record this entry, you will have to know which a/cs are
involved. Mimi a/c and Equipment a/c.
Case No.1 --->> If Mimi is the owner of this
business, returning the equipment would means equipment a/c will
need to Minus. And after returning the equipment, the creditor a/c
will also go down. Because you doesn't owe as much money
anymore.
Case No. 2 ---->> If Mimi is the person who bought your
equipment, then, your equipment a/c will increase due to the
returned equipments. Mini who is your debtor will go down because
she doesn't owe you as much too, returned equipment already.
A credit
note of 165 was receieved from KK Trading for the return of 2 boxes
of goods
Theory: What is a credit note? Who gives? Who
receives?
Recall. Credit is given by creditors when you return the goods
that you've purchased.
KK Trading is your creditor (the one you owe them money).
Because this is a credit sale/purchase nature, you do not need to
record this entry in Cash Book.
