Day: August 23, 2020

A trader’s purchases on credit for August amounted to £20,000. These purchases were subject to a trade discount of 10% and also a cash discount of 5% for accounts paid within 30 days.

How much was entered in the purchases journal?

Select ONE answer:

1. £17,000
2. £18,000
3. £19,000
4. £20,000

Show your workings to arrive at your answer, and explain and justify your reasons:

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This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – £20,000 * 0.9 = £18,000 (the value of the supplier invoices), The potential cash discount of £1,000 cannot at this stage be taken into account under the prudence concept / cost concept
3. Not correct
4. Not correct

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