Page 56 - ISCDEBK-XI

Journal 7.11

(xiii) Insurance Co. ...Dr. 75,000
Loss of Stock by Fire A/c ...Dr. 25,000
To Purchases A/c 1,00,000
(Being the company admitted claim for loss of goods by fire against
the goods purchased)
(xiv) Machinery A/c ...Dr. 65,000
To Bank A/c 65,000
(Being the machinery purchased for ` 50,000 paid ` 5,000 for its
cartage, ` 10,000 installation)
(xv) Bank A/c (Note) ...Dr. 44,100
Discount Allowed A/c ...Dr. 900
To Sales A/c 45,000
(Being the sale of goods at a profit of 20% on sales less 10% trade
discount and 2% cash discount)
(xvi) Machinery A/c ...Dr. 50,000
Bank Charges A/c ...Dr. 50
To Bank A/c 50,050
(Being the machinery purchased against draft)
Note: Cost of Goods Sold ` 40,000

*Profit = 20% of Sales = 25% of Cost = ` 10,000
` 20
[*Let Sales = ` 100; Profit = ` 20; Cost = ` 80; Profit on Cost (%) = ` 80 × 100 = 25%.]
`
Cost 40,000
Add: Profit on Cost (25%) 10,000
List Price 50,000
Less: Trade Discount 5,000
45,000
Cash Discount @ 2% 900
Amount received from Amit = ` 45,000 – ` 900 = ` 44,100.

Unsolved Questions

1. Jaspal and Ayub entered into the following transactions during February, 2022:
2022
Feb. 1 Jaspal sold 100 calculators to Ayub @ ` 100 each; Trade Discount allowed @ 20%.
Feb. 5 Sale by Jaspal of 10 calculators to Ayub in January, 2022 @ ` 70 each; Trade Discount 20%, were
returned by Ayub.
Feb. 17 Jaspal sold 10 keyboards @ ` 500 each less Trade Discount 20%.
Feb. 20 Ayub paid Jaspal by cheque ` 10,000 on account.
Feb. 29 Ayub paid the balance amount by cheque after deducting Cash Discount @ 2%.
Pass Journal entries.