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JAMB Principles of Accounts 2013 Question 10

Question 10

Cash Book

Alaka who owed Saka ₦15,000, settled his debt after deducting cash discount of 10%. To record the discount in the book of Saka, debit

  1. A.discount received account and credit Alaka's account.
  2. B.Alaka's account and credit discount received account.
  3. C.Saka's account and credit discount received account.
  4. D.discount allowed account and credit Alaka's account.
Show the answer and explanation

Answer: D (discount allowed account and credit Alaka's account.)

Explanation

Saka gave the discount, so it is discount allowed (an expense, debit) and Alaka's debt is reduced (credit Alaka).