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Ravi Traders, Pune, does not keep a purchase ledger. Opening creditors were Rs 48,000 and closing creditors Rs 62,000. During the year it paid creditors Rs 3,10,000 by cheque, received discount of Rs 6,000 from them, and returned goods worth Rs 14,000 to them. What were the credit purchases for the year?

Credit purchases were Rs 3,44,000. The debit side of the Total Creditors Account is payments 3,10,000, discount 6,000, returns 14,000 and closing balance 62,000, totalling 3,92,000. Deducting the opening creditors of 48,000 gives the credit purchases figure.

  1. ARs 3,44,000Correct
  2. BRs 3,16,000
  3. CRs 3,30,000
  4. DRs 3,02,000

Explanation

Credit side: opening 48,000 + purchases X. Debit side: payments 3,10,000 + discount 6,000 + returns 14,000 + closing 62,000 = 3,92,000. X = 3,92,000 - 48,000 = 3,44,000. Check: 48,000 + 3,44,000 = 3,92,000. The option Rs 3,16,000 wrongly ignores the returns and closing... actually it comes from adding the closing creditors wrongly.

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