Question 29.
Following information is given of an accounting year:
Opening Creditors ₹ 15,000; Cash paid to creditors ₹ 15,000; Returns Outward ₹ 1,000 and Closing creditors ₹ 12,000.
Calculate Credit Purchases during the year.
Answers
The credit purchases made during the year amounts to Rs 13,000
Explanation:
Purchases is the temporary account, that is used in the inventory system in order to record the purchases of the merchandise for the purpose of resale. This account of purchases reports the purchase of the goods.
The creditors account will be created as:
Creditors Account
DR side
Cash A/c Rs 15,000
Purchase return A/c Rs1,000
Balance c/d Rs 12,000
Total Rs 28,000
CR side
Balance b/d Rs 15,000
Purchases A/c Rs 13,000
Total Rs 28,000