Alhaji Farouk, a building materials merchant in Kano, maintains incomplete accounting records. The following ledger details were extracted regarding his trade creditors for the year ended 31 December 2025:
- Creditors balance at 1 January 2025: ₦45,000
- Cash payments to suppliers: ₦182,000
- Cheque payments to suppliers: ₦95,000
- Discount received from suppliers: ₦6,500
- Returns outwards: ₦4,800
- Contra set-off between sales and purchases ledgers: ₦3,200
- Refund received in cash from supplier for overpayment: ₦1,500
- Creditors balance at 31 December 2025: ₦52,000
What is the total amount of credit purchases for the year?
- ₦297,000Answer
- B₦300,000
- C₦290,600
- D₦284,000
Answer
The total credit purchases for the year is ₦297,000.
To find missing credit purchases, prepare the Purchases Ledger Control Account. The debit side consists of Cash paid (₦182,000), Cheques paid (₦95,000), Discount received (₦6,500), Returns outwards (₦4,800), Contra set-off (₦3,200), and Closing balance (₦52,000), yielding ₦343,500. The credit side consists of Opening balance (₦45,000), Supplier refund (₦1,500), and Credit Purchases. Subtracting ₦46,500 from ₦343,500 yields ₦297,000.
Step-by-Step Solution
Key Concept
Purchases Ledger Control Account Reconstruction