PRC-1 · Chapter 2 · Question 70 of 100
'Onyx Designs' received a 15% trade discount on goods with a list price of Rs. 200,000. Additionally, they took a 2% settlement discount for paying quickly. What total cost is initially entered in the Purchases Day Book upon receiving the invoice?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 170,000
Explanation
The trade discount (15% of 200,000 = 30,000) is deducted before recording. The invoice is for the net Rs. 170,000, which goes in the Purchases Day Book. The 2% settlement discount is recorded later in the cash book only upon payment.
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