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GCE Financial Accounting 1990 Question 43

Question 43

Cash Book

Date of delivery: 4/1/86; Customer: Mr. A.F.P.; Gross Amount: ₦12,000; Trade Discount: 15%; Cash Discount: 10%; Terms of Payment: 30 days of delivery

The amount of discount in the ledger is

  1. A.₦10,200
  2. B.₦2,820
  3. C.₦1,800
  4. D.₦1,200
  5. E.₦1,020
Show the answer and explanation

Answer: E (₦1,020)

Explanation

Trade discount (₦1,800) is never entered in the ledger; only the cash discount, 10% of the net 10,200 = ₦1,020, is.