Question 31
Cash BookUse the following information to answer questions 29 to 31.
Kwamenah bought goods worth Le 50,000 from Doe and Sons Limited on the following terms: 3% trade discount; 10% cash discount. Kwamenah returned defective goods worth Le 8,000 the next day and made payment for the remaining goods on the due date.
Doe and Son Limited would enter the 3% discount in the
- A.sales journal.
- B.cash book.
- C.purchases journal.
- D.journal proper.
Show the answer and explanation
Answer: A (sales journal.)
Explanation
Trade discount is deducted on the invoice, so the seller's sales journal shows the sale net of it; it never goes through the cash book.