This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
ScanSolve AI Answer
Welcome back 🦅confi✝️dence — been a while! Let's pick up where you left off. To ascertain the amount of purchases and sales, we will prepare the Creditors Control Account and the Debtors Control Account, respectively. Step 1: Prepare the Creditors Control Account. The Creditors Control Account (also known as Trade Payables Control Account) is used to determine the total credit purchases for the period. Debit entries (decrease in creditors): Returns Outwards: 75 Cash payment to creditors for goods supplied: 5,625 Bills Payable: 1,702 Discount Received: 527 Contra entry (amount due from debtors set off against amount due to him for supplies): 340 Closing Balance (31/12/2024): 1,339 Credit entries (increase in creditors): Opening Balance (1/1/2024): 1,226 Purchases (balancing figure) Step 2: Calculate the total purchases. We balance the Creditors Control Account to find the total purchases. Total Debits &= \75 + \5,625 + \1,702 + \527 + \340 + \1,339 \\ &= \9,608 \\ \\ Total Credits &= Opening Balance + Purchases \\ \9,608 &= \1,226 + Purchases \\ Purchases &= \9,608 - \1,226 \\ &= \$8,382