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Hi John
Thanks for helping out as ever. For Question 20.10 , it says its a purchase control account, is that another term for the Payables control account ?. I also want to know why the Cost of goods taken by Senji for her personal use is credited to the control account. My understanding is that Drawings is debited and the payables control account credited. Is this correct ?
I hope to hear from you soon
Arahn
yes sir i also didn’t get this part why it is credited to purchase control account
It isn’t another term, it is a mistake by BPP. The account should be headed up either ‘purchase ledger control account’ or ‘payables control account’ (both mean the same).
Strictly the drawings should not appear in this account. That would mean that the missing figure to be debited to purchases would be 1,000 higher. However the drawings should then be Dr Drawings Cr Purchases with 1,000.
So the final answer is correct (and how you show your workings for it is irrelevant given that nobody will look at them 🙂 )
but sir if we take heading as payables for the account then accounting entry for drawing would be Dr payables and Cr drawings.
but if its purchases then accounting entry would be Dr drawings and Cr purchases
aren’t these two things different in terms of accounting entries payables is a liability and purchases are assets for the company?
As I wrote in my reply, the entry should be Dr Drawings and Cr Purchases. However, as I also wrote, the answer remains the same and the double entry and the t-account are not asked for.
ok sir thank you for helping out. one last thing i want to ask the total purchases included the 1000 amount and when she took 1000 from the inventory thats what we basically doing deducting drawing from purchases
okay sir thank you for clearing my doubt. sorry to bother you again one last thing that you mentioned the there is error by bpp.
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