ACCA F3 Past Exam Sole Trader
Annie is a sole trader who does not keep full accounting records. The following details relate to her transactions with
credit customers and suppliers for the year ended 30 June 2006:
| Trade receivables, 1 July 2005 | 900,000 |
| Trade payables, 1 July 2005 | 70,000 |
| Cash received from customers | 700,000 |
| Cash paid to suppliers | 700,000 |
| Discounts allowed | 400,000 |
| Discount received | 40,000 |
| Contra account | 5,000 |
| Trade receivables, 30 June 2006 | 200,000 |
| Trade payables, 30 June 2006 | 500,000 |
What figure should appear in Annie’s income statement for the year ended 30 June 2006 for purchases?
Answer is $1,175,000.
| Opening payables | 70,000 | |
| Cash paid to suppliers | 700,000 | |
| Discount received | 40,000 | |
| Contra account | 5,000 | |
| Purchase | To solve | |
| Closing payables | 500,000 |
Purchase = Closing balance trade payables + Cash paid to suppliers + Discounts received + Contra - opening balance trade payables
Purchase = Closing balance trade payables $500,000 + Cash paid to suppliers $700,000 + Discounts received $40,000 + Contra $5,000 - opening balance trade payables $70,000
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