and the value of goods supplied. It also states the discount allowable (trade and cash) and the condition under which payment is expected. The entries in the purchase book are made on the basis of invoices received from the supplies with the amounts net of trade discount/quantity discount. Trade discount is a reduction granted by the supplier from the list price of goods and services on business consideration such as quantity bought, trade practices other than for prompt payment. The object of allowing trade discount is to enable the retailer to sell the goods to the customer at list price and still leaving margin for meeting business expenses and his profit. Entries in the books of both supplier as well as retailer are made on the basis of net amount i.c. invoice price less trade discount Posting After recording transactions in the Purchase Book, the posting in ledger accounts will be made. The posting from the Purchases Book is made as follows: a) Debit the Purchases Account with the periodical totals of the Purchases Book. On the debit side of the Purchases Account, r22 write To total as per Purchase Book" or "To Sundries" in the particulars column. b) Personal accounts of each individual supplier is credited with the net amount of Inward Invoice recorded in Purchases Book by writing "By Purchases". Illustration 5: Prepare the Purchases Book for the month of Feb, 2006 from the following particulars of M/s Sharma & Co. and also post them into Ledger. 2006 Feb. 4 Purchased on credit from Rajesh Bros. & Co. 10 Bags of Tea @ Rs. 1000 per bag 5 Bags of Coffee Rs. 3000 per bag Trade discount @ 10% Feb. 16 Purchased from Shiva Enterprises on credit 20 bags of Rice @ Rs. 800 per bag 2 bags of Wheat @ Rs. 500 per bag Trade discount @ 5% Feb. 20 Purchased Furniture on Credit from Universal Furniture House for Rs. 3000 Feb 24 Bought on credit from Ashwani & Co. 30 tin Ghee @ Rs. 400 per tin 10 tin Oil @ Rs. 300 per tin Trade Discount 20%