Daybooks and Discounts Worksheet

1. The following information is from Harry’s Parts price list.

Unit Price $8.00

Trade discount 20%
Cash discount 2½ % for payment within 14 days

Trevor bought 100 units on credit from Harry’s Parts on 21 March. He returned 10
damaged units on 23 March and paid, by cheque, for the remaining 90 unit on 30
March.
Required:

a. Explain what is meant by trade discount.

[1]

b. Calculate the trade discount on the purchase of 100 units.

[2]

c. Name the document which the supplier, Harry’s Parts, would send to Trevor
on the return of the damaged units.

[1]

d. Name the daybook/journal in which the document in {c} should be recorded

by Trevor.

[1]

e. Explain why Harry’s Parts would give cash discount.

[1]

f. Record the payment to Harry’s Parts on the 30 March in the three column
cash book of Trevor below.
[4]
 Trevor’s
Cash book
Date Details Dis All Cash Bank Date Details Dis All Cash Bank

[total 4 marks]