CMA Foundation · Fundamentals of Financial and Cost Accounting · Journal and Ledger
A firm's purchases book total for a month is Rs 1,84,000. It includes Rs 24,000 for a computer bought on credit, which was wrongly entered there, and a credit purchase of goods of Rs 6,000 was omitted from all books. Ignoring GST, what should be the corrected total posted to the Purchases Account (goods) as a debit?
The corrected debit to the Purchases Account is Rs 1,66,000. The Rs 24,000 computer is a capital asset, so it is removed from the Purchases Book, leaving 1,60,000. The omitted credit purchase of goods of Rs 6,000 is then added, giving Rs 1,66,000.
- ARs 1,66,000Correct
- BRs 1,60,000
- CRs 1,90,000
- DRs 1,84,000
Explanation
The computer is a capital item and must be removed from the Purchases Book: 1,84,000 - 24,000 = 1,60,000. The omitted goods purchase of Rs 6,000 must then be added: 1,60,000 + 6,000 = Rs 1,66,000. Rs 1,60,000 ignores the omission, and Rs 1,90,000 adds the computer and the omission wrongly.
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