PRC-1 · Chapter 7 · Question 46 of 100
A merchant bought 100 bags of cement at a retail price of Rs. 200 subject to a 5% trade discount. What is the gross purchase value recorded in the books before accounting for payments?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 19,000
Explanation
Trade discounts are deducted immediately before recording the transaction. Gross list price = 100 x 200 = 20,000. Trade discount = 5% x 20,000 = 1,000. Recorded purchase value = 19,000.
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