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ACCA Applied Knowledge · Financial Accounting · Sales and purchases

A purchases day book totals for the month are: goods for resale $30,000, office stationery $1,200, and sales tax $6,240, giving gross invoices of $37,440. Which one of the following is the correct posting to the general ledger?

Debit purchases $30,000, stationery $1,200 and sales tax $6,240, and credit the payables control account with the gross $37,440. The invoices are on credit, so the liability to suppliers is credited, and the recoverable sales tax is debited.

  1. ADebit purchases $30,000, debit stationery $1,200, debit sales tax $6,240, credit payables control $37,440Correct
  2. BDebit purchases $31,200, debit sales tax $6,240, credit cash $37,440
  3. CDebit purchases $30,000, debit stationery $1,200, credit sales tax $6,240, credit payables control $25,000
  4. DDebit payables control $37,440, credit purchases $30,000, credit stationery $1,200, credit sales tax $6,240

Explanation

Credit purchases are posted by debiting the expense and asset accounts for net amounts and the recoverable sales tax, with a credit to payables control for the gross total. 30,000 + 1,200 + 6,240 = 37,440. Crediting cash is wrong because the invoices are on credit.

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