Q.From the following particulars, ascertain the Credit Purchases for the year by preparing a Total Creditors Account: Opening Creditors (1.4.2022) ₹40,000; Cash paid to creditors during the year ₹1,80,000; Discount received from creditors ₹4,000; Purchases Returns ₹6,000; Closing Creditors (31.3.2023) ₹45,000.

Credit purchases is the only unknown item on the credit side of the Total Creditors Account, so it is found as the balancing figure once every other item is entered.

Debit side total = 1,80,000 + 4,000 + 6,000 + 45,000 = ₹2,35,000. Credit Purchases = 2,35,000 − 40,000.

Total Creditors Account for the year ended 31.3.2023

Working:

Total of the debit side = 1,80,000 + 4,000 + 6,000 + 45,000 = ₹2,35,000

Credit Purchases = Total debit side − Opening Creditors = 2,35,000 − 40,000 = ₹1,95,000

Cross-check: Opening Creditors + Credit Purchases should equal everything that reduced the creditors balance plus the closing balance: 40,000 + 1,95,000 = 2,35,000, which matches 1,80,000 + 4,000 + 6,000 + 45,000 = 2,35,000.

Students often mix up which side Discount Received and Purchases Returns belong on — both reduce what is owed to creditors, so like cash paid they go on the debit side of the Total Creditors Account, opposite to how Discount Allowed and Sales Returns are treated in the Total Debtors Account. Mixing the two accounts' conventions is the single most common error in this topic.