The total of the creditors at the beginning of the year was ₦4,600 and at the end of the year ₦5,250. During the year, ₦26,500 was paid to suppliers and ₦130 was received in discounts from these suppliers. The purchases for the year Would be ___
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Correct Answer: Option D
Explanation:
To calculate purchases for the year, we use the Purchases Ledger Control Account (Creditors Control Account) format.
Formula:
\[
\text{Credit Purchases} = \text{Closing Creditors} + \text{Payments to Suppliers} + \text{Discounts Received} - \text{Opening Creditors}
\]
Given:
- Opening Creditors = ₦4,600
- Closing Creditors = ₦5,250
- Payments to Suppliers = ₦26,500
- Discounts Received = ₦130
Plug into the formula:
\[
\text{Credit Purchases} = 5,250 + 26,500 + 130 - 4,600
\]
\[
= 31,880
\]
\[
\text{Purchases} = ₦27,280
\]
Correct Answer: D. ₦27,280
To calculate purchases for the year, we use the Purchases Ledger Control Account (Creditors Control Account) format.
Formula:
\[
\text{Credit Purchases} = \text{Closing Creditors} + \text{Payments to Suppliers} + \text{Discounts Received} - \text{Opening Creditors}
\]
Given:
- Opening Creditors = ₦4,600
- Closing Creditors = ₦5,250
- Payments to Suppliers = ₦26,500
- Discounts Received = ₦130
Plug into the formula:
\[
\text{Credit Purchases} = 5,250 + 26,500 + 130 - 4,600
\]
\[
= 31,880
\]
\[
\text{Purchases} = ₦27,280
\]
Correct Answer: D. ₦27,280