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JAMB Principles of Accounts 2013 Question 14

Question 14

Double Entry and the Ledger

The purchase of mattresses from Freehold enterprises by cheque amounted to ₦305,150. The correct entries for this transaction in the book of the buyer is to debit

  1. A.sales account and credit bank account.
  2. B.purchases and credit bank account.
  3. C.cash and credit freehold.
  4. D.bank and credit freehold.
Show the answer and explanation

Answer: B (purchases and credit bank account.)

Explanation

Goods bought for resale are debited to purchases; paying by cheque reduces the bank balance, so bank is credited.