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This topic contains 3 replies, has 3 voices, and was last updated by  rick40 1 year, 2 months ago. This post has been viewed 75 times

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• #51105

jennykee76
Participant

Hi, i wonder if i could obtain any help out there.

Here’s the question (Extracted):
Charles sold goods on credit to Cody with a list price of \$3,200. He allows a 10% trade discount and a further 2% discount for payment within seven days. Cody paid within two days.

How much discount should be recorded in the Discount Allowed as a result of the above transactions?

What I had calculated was, I actually calculated the 10% disc on the Sales Price, and after lessing out the 10% disc, i calculated another 2% of further discount based on the net payable amount.

However, i was wrong as only that 2% further discount has been taken as Discount Allowed and not the 10% discount. Is it the 10% discount is supposed to be taken separately as Trade Discount, instead of taking as Discount Allowed? I thought they are the same.

Hope to have someone out there to help me unravel this..

#92236

Vipin
Participant

for discount allowed or received we will take only the cash discount.
that is 3200*.1*.02
trade discount is taken as price in purchase account. we wont debit 3200 in purchase acc instead 3200*.9

#92237

jennykee76
Participant

Got it now. Thanks Vipin.

#92238

rick40
Member

hi! could you answer this for me?

On june 1, 2012, Marites De Chavez Forest Products sold merchandise with a P120,000 list price.

solve for:
a)Trade discount=30% credit terms: 2/10,n/30 date paid: june 8
b)Trade discount=40% credit terms: 1/10,n/30 date paid: june 15
c)Trade discount= ? credit terms: 2/10,n/30 date paid: june 11
d))Trade discount= credit terms: 1/10,n/30 date paid: june 14
e))Trade discount= credit terms: n/30 date paid: june 28

for each sales terms, determine the following:
1. the amount recorded as sale.
2.the amount of cash recieved.

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