Mr. Adebayo, a timber merchant who operates an incomplete records system, extracted the following details regarding his trade creditors for the year ended 31 December 2025:
| Transaction Details | Amount (₦) |
|---|---|
| Trade creditors balance at 1 January 2025 | 64,000 |
| Cheque payments to suppliers | 310,000 |
| Discount received | 8,500 |
| Returns outwards | 12,500 |
| Contra settlement with sales ledger | 5,000 |
| Trade creditors balance at 31 December 2025 | 78,000 |
What is the total credit purchases for the year?
- A₦308,000
- B₦333,000
- C₦345,000
- ₦350,000Answer
Answer
The total credit purchases for the year is ₦350,000.
To find the missing total credit purchases figure, a Purchases Ledger (Creditors) Control Account is reconstructed. All transactions reducing the liability—payments by cheque (₦310,000), discount received (₦8,500), returns outwards (₦12,500), contra settlement (₦5,000), and the closing balance (₦78,000)—are posted to the debit side, giving a sum of ₦414,000. Subtracting the opening balance of ₦64,000 yields credit purchases of ₦350,000.
Step-by-Step Solution
Key Concept
Reconstruction of Purchases Ledger Control Account to calculate missing credit purchases