B. Little owed his suppliers £95,000 at the start of the year. By the end of the year he had debts
Outstanding to suppliers of £60,000. He paid suppliers £150,000 by cheque and £25,000 in cash. The
Suppliers gave B. Little a total of £4,000 in cash discounts.
What are the purchases for the year?

Question

Quizplus · Accepted Answer

To calculate purchases for the year, start with the opening debt to suppliers (£95,000), add purchases (unknown), subtract payments made to suppliers (£150,000 + £25,000 = £175,000), add back the cash discounts received (£4,000), and this should equal the closing debt (£60,000). So, the equation is £95,000 + Purchases - £175,000 + £4,000 = £60,000. Solving for Purchases gives £144,000.

B Little Owed His Suppliers £95,000 at the Start of the Year