Alaka who owed Saka #15,000, settled his debt after deducting cash discount of 10percent. To record the discount in the book of Saka, debit

Answer Details

The correct option to record the cash discount in Saka's book is to debit the "Discount Received Account" and credit "Alaka's Account". This is because when Alaka settles the debt after deducting the cash discount of 10%, Saka is essentially receiving less money than what was originally owed. The discount received is considered as income for Saka and should be recorded separately in the Discount Received Account. On the other hand, Alaka's account should be credited because he is paying less money than what was originally owed. The credit entry in Alaka's account would reduce his outstanding balance in Saka's book. Therefore, to record the cash discount, we debit the Discount Received Account to record the income, and credit Alaka's account to reduce his outstanding balance.