Example Trade Discount on Sales

Example Trade Discount on Sales

Trade discount at the time of sale is not taken into account in the books of account rather entry is recorded at net amount as sales. The trade discount must not be mix with discount offered for early payment which is taken into account as expense.

Example of Sales Trade Discount

Falah & Company made a sales for 2,000 $ on Cash to Karman & Co and offered a Trade discount @ 10%.

Solution

The amount will be recorded at net amount i.e. 1800 (2000 – 200) . The amount of Trade discount of $ 200 is calculated 5% of 1000 i.e. 20.

Date	Particulars	Dr	Cr
18 Feb ,2009	Cash a/c	1800
18 Feb ,2009	Sales a/c		1800