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Difficulty: MediumPurchases Journal and Purchases Returns Journal

During October 2026, Emeka Enterprises completed the following transactions:
- Oct 4: Purchased goods for resale on credit from Chidi Ltd valued at ₦180,000\text{₦}180,000, subject to a 10%10\% trade discount.
- Oct 12: Purchased office equipment on credit from Prime Tech Ltd for ₦120,000\text{₦}120,000.
- Oct 20: Purchased goods for resale on credit from Bola & Sons valued at ₦240,000\text{₦}240,000, subject to a 15%15\% trade discount.
- Oct 22: Purchased goods for resale for cash amounting to ₦45,000\text{₦}45,000.

What is the total amount (in ₦\text{₦}) to be recorded in the Purchases Journal for October 2026?

Answer: 366000 ₦

Answer

The total amount to be recorded in the Purchases Journal for October 2026 is ₦366,000.
The Purchases Journal only records credit purchases of goods intended for resale. The net amounts after trade discounts are ₦162,000 for the Oct 4 transaction and ₦204,000 for the Oct 20 transaction. Office equipment is a non-current asset (General Journal) and cash purchases belong in the Cash Book. Thus, the total balance of the Purchases Journal is ₦162,000 + ₦204,000 = ₦366,000.

Step-by-Step Solution

1
Calculate the net price of goods purchased on credit from Chidi Ltd on Oct 4
₦162,000
Trade discounts are deducted immediately from the gross price when entering invoices into books of original entry: ₦180,000−(10%×₦180,000)=₦162,000\text{₦}180,000 - (10\% \times \text{₦}180,000) = \text{₦}162,000.
2
Evaluate the transaction on Oct 12 for office equipment
Excluded (₦0)
The Purchases Journal strictly records credit purchases of goods intended for resale (trading inventory). Non-current asset purchases on credit are entered in the General Journal (Journal Proper).
3
Calculate the net price of goods purchased on credit from Bola & Sons on Oct 20
₦204,000
Apply the 15%15\% trade discount: ₦240,000−(15%×₦240,000)=₦204,000\text{₦}240,000 - (15\% \times \text{₦}240,000) = \text{₦}204,000.
4
Evaluate the cash purchase on Oct 22
Excluded (₦0)
Cash transactions are recorded in the Cash Book, not in the Purchases Journal.
5
Calculate the monthly total for the Purchases Journal
₦366,000
Sum the net amounts of eligible credit purchases of inventory: ₦162,000+₦204,000=₦366,000\text{₦}162,000 + \text{₦}204,000 = \text{₦}366,000.

Key Concept

Purchases Journal Scope and Trade Discount Calculations
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Topics

Purchases Journal and Purchases Returns Journal

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