PRC-1 · Chapter 2 · Question 54 of 100
'Crescent Furniture' receives a cheque of Rs. 48,000 from a customer in full settlement of a Rs. 50,000 debt. What is the correct double-entry to record the settlement discount allowed?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Debit Bank Rs. 48,000, Debit Discount Allowed Rs. 2,000, Credit Receivables Rs. 50,000
Explanation
The receipt of Rs. 48,000 increases the bank balance (Debit). The Rs. 2,000 difference is an expense to the business (Debit Discount Allowed). The customer's full Rs. 50,000 obligation is settled (Credit Receivables).
More Books of Prime Entry MCQs
- Q56'Vertex Traders' owes Rs. 15,000 to 'Horizon Suppliers'. Conversely, 'Horizon Suppliers' owes Rs. 10,000 to 'Vertex Traders'. If they…
- Q57In a three-column cash book, where are settlement discounts received from credit suppliers recorded?
- Q58A cheque received from a credit customer was initially deposited and entered in the cash book. It was subsequently returned by the bank as…
- Q59'Luminous Merchants' returns defective goods to a credit supplier. Which internal document does 'Luminous' issue to the supplier to…
- Q60When 'Titanium Electronics' receives goods returned by a disappointed customer, which source document does 'Titanium' generate to…