When is purchases account credited?
Purchases Account will be credited in the following cases.
- If goods are given as free sample.
- If goods are stolen.
- If goods are lost.
- If goods are given away as charity.
- If goods are withdrawn by the proprietor for personal use.
Normally when goods are going out from the business are termed as sales. But in all the above cases purchases will be reduced by crediting as all above are not sales, rather goods are going out from business without being sold.
Miller started business on 1st June 2019. His transactions for the month of June were as follows.
June 1: He started business with cash $450,000; Goods $5,000 and Machine $25,000.
June 3: Purchased furniture from John $10,000 and paid carriage on it $1,500.
June 7: Purchased goods from Harry $1,500 subject to 5% trade discount.
June 9: Purchased a typewriter for office worth $2,500.
June 13: Sold goods to Marry on credit of $1,000.
June 17: Received $950 from Marry in full settlement of his account.
June 20: Goods worth $500 were given as charity and goods are withdrawn by the proprietor for personal use $3,000.
June 23: Goods lost by fire $1,500.
June 25: One table and two chairs were stolen worth $2,000.
June 28: Paid $2,500 to Harry in part payment of the amount due to him.
June 30: Paid Rent $300; paid office Salaries $700; paid Commission $500.
Record these transactions in Journal of Mr. Miller