Paper 3 · November 2010 · club receipts and payments, income and expenditure account

A social club paid $26,500 to its bar suppliers during the year ended 31 May 2007. Amounts owing to bar suppliers were $6,400 at 1 June 2006 and $3,200 at 31 May 2007. Calculate the bar purchases for the year.

Model answer

23300

Also accepted: $23,300, 23,300

Explanation

Purchases = cash paid $26,500 - opening creditors $6,400 + closing creditors $3,200 = $23,300. The opening balance was bought last year, and the closing balance was bought this year but not yet paid for.

Derived from ZIMSEC Accounting Paper 3 (Case Study), November 2010, Q1

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