A
discount which is allowed by seller to buyer on list price (Written Price) of
goods at the spot of selling is called trade discount. Trade discount is not
recorded in accounting record.
For
example: If the price of book is Rs. 100 and the seller allowed a discount at
the rate 10% then the price of book will Rs. 90. So trade discount will not be
recorded.
Discount=
100 x 10/100 =10 Price of Book = List
Price – Discount = 100 -10 = 90
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