A business owner maintaining incomplete accounting records extracted the following informa… — JAMB UTME

A business owner maintaining incomplete accounting records extracted the following information relating to creditors and purchases for the financial year ended 31 December 2025:

Item	Amount ( $₦$ )
Trade creditors balance at 1 January 2025	$18,000$
Trade creditors balance at 31 December 2025	$24,500$
Total payments made to creditors by cheque	$65,000$
Discounts received from suppliers	$2,500$
Cash purchases paid directly	$12,000$

What is the total value of purchases for the year?

$₦86,000$ Answer
B
$₦74,000$
C
$₦81,000$
D
$₦73,000$

Answer

The total value of purchases for the year is

₦86,000

To find credit purchases, prepare a Creditors Control Account: Credit Purchases = Payments (

₦65,000

) + Discounts Received (

₦2,500

) + Closing Creditors (

₦24,500

) - Opening Creditors (

₦18,000

) =

₦74,000

. Adding direct cash purchases (

₦12,000

) gives Total Purchases of

₦86,000

Step-by-Step Solution

Reconstruct Credit Purchases using the Creditors Control Account equation

Credit Purchases =

\text{Payments} + \text{Discounts Received} + \text{Closing Creditors} - \text{Opening Creditors} = 65,000 + 2,500 + 24,500 - 18,000 = 74,000

Debit items in creditors control (payments, discounts received, closing balance) must equal credit items (opening balance + credit purchases).

Calculate Total Purchases by adding Cash Purchases to Credit Purchases

Total Purchases =

\text{Credit Purchases} + \text{Cash Purchases} = 74,000 + 12,000 = 86,000

Total purchases comprise both cash and credit transactions during the period.

Key Concept

Reconstruction of Total Purchases from Incomplete Records via Purchases Ledger Control Account

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