Accounts

This query is : Resolved

Puran Chand (Querist)
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08 March 2012 Confused about :

Journalize the following Transaction:
Sham Supplied goods costing Rs.1000 to Ramesh at an invoice price of 10% above cost at a trade discount of 5%.

Please Help

B Ravi Kumar ACMA, MBA, M Com

B Ravi Kumar ACMA, MBA, M Com (Expert)
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08 March 2012 Your query is incomplete.......

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ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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08 March 2012 Cost Price Rs.1000
Add 10% on 1000 Rs.100

Ramesh A/c Dr Rs.1045.00
Trade Discount Dr Rs. 55.00 (5% on 1100)
To Sales A/c Rs.1100.00

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Puran Chand

Puran Chand (Querist)
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08 March 2012 Thanking you sir Sh. Obulirajan..

please confirm:
when we do entry in my answer book we need to show trade discount or not
or this following entry of this transaction is right

Ramesh A/c....1045
To sales A/c.......1045

(being sale to Ramesh @ 5% trade discount.)

ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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08 March 2012 Yes your entry is correct when the trade discount given in the invoice itself.

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B Ravi Kumar ACMA, MBA, M Com

B Ravi Kumar ACMA, MBA, M Com (Expert)
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09 March 2012 To have complete picture of the transaction, you need to show Trade discount in the journal entry.

ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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09 March 2012 Dear not required to show trade discount in journal if the same is given in invoice...

B Ravi Kumar ACMA, MBA, M Com

B Ravi Kumar ACMA, MBA, M Com (Expert)
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09 March 2012 ok, how you will come to know how much trade discount extended during that period?

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ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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09 March 2012 Is your accounting software permits, the same can be generated.. i.e. billing report, sales report, invoicewise billing report etc.,

B Ravi Kumar ACMA, MBA, M Com

B Ravi Kumar ACMA, MBA, M Com (Expert)
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09 March 2012 When you pass this entry:
Ramesh A/c Dr 1045
To Sales A/c 1045

How Accounting software give the report??

ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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09 March 2012 Dear, Now a days no body is using manual accounting system.. almost everybody shifted to ERP based accounting... ERP softwares like SAP, Oracle ect., will give such kind of report..

However, if you wish to show the trade discount in your P&L there is no harm.

B Ravi Kumar ACMA, MBA, M Com

B Ravi Kumar ACMA, MBA, M Com (Expert)
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12 March 2012 My Dear , without entering basic entries properly, no software will give you report accurately.

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