ACCA Applied Knowledge · Financial Accounting · Trial balance
Dunmore Co's trial balance includes these extracts: sales $620,000; sales returns $14,000; purchases $350,000; purchase returns $9,000; opening inventory $30,000; carriage inwards $6,000; carriage outwards $11,000. Which of the following is correct?
Sales and purchase returns of $620,000 and $9,000 are credit balances, while sales returns of $14,000 is a debit balance. Carriage inwards, carriage outwards and opening inventory are all debits because they are costs or assets, so only this statement is correct.
- ACarriage outwards is a credit balance of $11,000
- BPurchase returns of $9,000 and sales of $620,000 are both credits, and sales returns $14,000 is a debitCorrect
- COpening inventory is a credit balance of $30,000
- DCarriage inwards of $6,000 is a credit balance
Explanation
Sales and purchase returns are contra accounts: purchase returns reduce purchases and are credits, sales are credits, and sales returns reduce revenue so are debits. Carriage inwards, carriage outwards and opening inventory are all debits (costs or asset brought forward).
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