Journal Entry for Full/Final Settlement

A business may allows 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:

Related Articles :

• Journal Entry for Expenditure on Assets (Erection or Installation)
• Journal Entry for Expenses on Purchase of Goods
• Journal Entries under GST (Goods and Services Tax)