Use the following information to answer this question. Cash purchase - D 29,641 Creditors 1/1/14 - D 2,473 Creditors 31/12/14 - D 3,117 Cash paid to credito...

Use the following information to answer this question.

Cash purchase - D 29,641
Creditors 1/1/14 - D 2,473
Creditors 31/12/14 - D 3,117
Cash paid to creditors - D 127,345
Discount received - D 4,211

The credit purchases is

Answer Details

The credit purchases can be calculated as follows: Credit Purchases = Cash Purchase + Increase in Creditors - Decrease in Creditors - Discount Received Credit Purchases = D 29,641 + (D 3,117 - D 2,473) - (D 127,345 - D 0) - D 4,211 Credit Purchases = D 29,641 + D 644 + D 127,345 + D 4,211 Credit Purchases = D 161,841 Therefore, the credit purchases are D 161,841. To arrive at the credit purchases figure, we start with the cash purchase figure and then adjust for the increase and decrease in creditors over the year, as well as any discount received on purchases. The increase in creditors is added to the cash purchase figure, while the decrease in creditors is subtracted. Additionally, any discount received on purchases is subtracted as it reduces the overall cost of purchases. Knowing the credit purchases figure is important for analyzing a company's financial performance, as it helps in calculating the cost of goods sold and gross profit.