CA Foundation · Accounting · Accounting Process
In the books of Kiran Stores, the Purchases Account shows a debit total of Rs 3,80,000 and the Purchases Returns are Rs 24,000, which are recorded in a separate account. At the year end, Purchases Returns Account is transferred to Purchases Account. What balance remains in the Purchases Account after this transfer?
The Purchases Account is left with a debit balance of Rs 3,56,000. Purchases Returns of Rs 24,000 carry a credit balance, so transferring them to Purchases reduces the debit total of Rs 3,80,000 by that amount.
- ARs 3,56,000 debitCorrect
- BRs 4,04,000 debit
- CRs 3,56,000 credit
- DRs 24,000 debit
Explanation
Purchases Returns has a credit balance of Rs 24,000. Transferring it to Purchases debits Purchases Returns and credits Purchases by Rs 24,000. Net balance = 3,80,000 - 24,000 = Rs 3,56,000 debit. Adding the returns (Rs 4,04,000) is wrong because returns reduce purchases.
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