The purchases ledger control account of a company had an opening balance of ₦45,600 and closing balance of ₦72,600 credit. The
company made payments of ₦437,000 to credit suppliers during the period; and had discount received of ₦18,600 on this account. What were the credit purchases for the period?
company made payments of ₦437,000 to credit suppliers during the period; and had discount received of ₦18,600 on this account. What were the credit purchases for the period?
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Correct Answer: Option B
Explanation:
To determine the credit purchases for the period, we can use the Purchases Ledger Control Account (also called the Creditors Control Account) format.
\[
\text{Credit Purchases} = \text{Closing Balance} + \text{Payments} + \text{Discounts Received} - \text{Opening Balance}
\]
Given:
- Opening Balance (Creditors at start) = ₦45,600
- Closing Balance (Creditors at end) = ₦72,600
- Payments to suppliers = ₦437,000
- Discounts received = ₦18,600
Plug into the formula:
\[
\text{Credit Purchases} = 72,600 + 437,000 + 18,600 - 45,600
\]
\[
= 528,200 - 45,600 = \boxed{₦482,600}
\]
To determine the credit purchases for the period, we can use the Purchases Ledger Control Account (also called the Creditors Control Account) format.
\[
\text{Credit Purchases} = \text{Closing Balance} + \text{Payments} + \text{Discounts Received} - \text{Opening Balance}
\]
Given:
- Opening Balance (Creditors at start) = ₦45,600
- Closing Balance (Creditors at end) = ₦72,600
- Payments to suppliers = ₦437,000
- Discounts received = ₦18,600
Plug into the formula:
\[
\text{Credit Purchases} = 72,600 + 437,000 + 18,600 - 45,600
\]
\[
= 528,200 - 45,600 = \boxed{₦482,600}
\]