XYZ received an invoice from T. Henry for £1,000, less a 20% trade discount for inventory. The invoice also included terms which stipulated that a cash discount of 5% would be allowed if the invoice was paid within 10 days.
The double entry to record the initial purchase in the books of XYZ is as follows:

Question

Quizplus · Accepted Answer

The initial purchase is recorded after deducting the trade discount of 20% from £1,000, which results in £800. The cash discount is not recorded until the payment is actually made within the discount period.

XYZ Received an Invoice from T