Journal Entry for Full/Final Settlement
A business may allow or receive a discount at the time of full and final settlement of the accounts of debtors or creditors.
Journal Entry:
Example:
- 01 April 2022: Purchased goods from Sayeba at the list price of ₹10,000 at a 10% Trade Discount.
- 05 April 2022: Returned goods to Sayeba for the list price of ₹1,000.
- 10 April 2022: Paid cash to Sayeba ₹7,500 in full & final settlement of her account.
Solution:
Example:
- 01 May 2022: Sold goods to Nisha at the list price of ₹50,000 at a 2% Trade Discount.
- 05 May 2022: Nisha returned the goods worth ₹5,000.
- 10 May 2022: Cash received from Nisha ₹43,000 in full & final settlement of her account.
Solution:
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