These are goods bought by a business for resale. A business buys goods from suppliers to resale at a profit. These goods can be bought in cash or by cheque or on credit. When goods are bought on credit, creditors are created. Creditors are paid within a period of 12 months An increase in purchases we debit. Meaning we enter the increase on the debit side

1. 1
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2. 2
CHAPTER 4
PURCHASES
These are goods bought by a business for resale.
A business buys goods from suppliers to resale at a profit. These goods can be
bought in cash or by cheque or on credit.
When goods are bought on credit, creditors are created. Creditors are paid
within a period of 12 months
An increase in purchases we debit. Meaning we enter the increase on the
debit side
Examples
20X2
January 4 Bought goods in cash $5,000
January 6 Bought goods in cash $6,000
January 7 Bought goods for $7,000 paying by cheque
January 9 Bought goods for $9,000 paying by cheque
January 10 Bought goods in cash $4,000
20X2
January 4 Bought goods in cash $5,000
January 6 Bought goods in cash $6,000
January 7 Bought goods for $7,000 paying by cheque
January 9 Bought goods for $9,000 paying by cheque
January 10 Bought goods in cash $4,000

3. 3
Please note that because the transactions are in cash, customer names are
not needed.
In the example below Purchases account has increased by $5,000 and cash
account has decreased by $5,000.
Therefore debit Purchases account with $5,000 and credit cash account with
$5,000.
20X2
January 4 Bought goods in cash $5,000
January 6 Bought goods in cash $6,000
January 7 Bought goods for $7,000 paying by cheque
January 9 Bought goods for $9,000 paying by cheque
January 10 Bought goods in cash $4,000
In the example below Purchases account has increased by $6,000 and cash
account has decreased by $6,000.
Therefore debit Purchases account with $6,000 and credit cash account with
$6,000.
20X2
January 4 Bought goods in cash $5,000
January 6 Bought goods in cash $6,000
January 7 Bought goods for $7,000 paying by cheque

4. 4
January 9 Bought goods for $9,000 paying by cheque
January 10 Bought goods in cash $4,000
In the example below Purchases account has increased by $7,000 and bank
account has decreased by $7,000.
Therefore debit Purchases account with $7,000 and credit bank account with
$7,000.
20X2
January 4 Bought goods in cash $5,000
January 6 Bought goods in cash $6,000
January 7 Bought goods for $7,000 paying by cheque
January 9 Bought goods for $9,000 paying by cheque
January 10 Bought goods in cash $4,000
In the example below Purchases account has increased by $9,000 and bank
account has decreased by $9,000.
Therefore debit Purchases account with $9,000 and credit bank account with
$9,000.

5. 5
20X2
January 4 Bought goods in cash $5,000
January 6 Bought goods in cash $6,000
January 7 Bought goods for $7,000 paying by cheque
January 9 Bought goods for $9,000 paying by cheque
January 10 Bought goods in cash $4,000
In the example below Purchases account has increased by $4,000 and cash
account has decreased by $4,000.
Therefore debit Purchases account with $4,000 and credit cash account with
$4,000.
Assignment 4.1
Enter the transactions below in T accounts using double entry system
20X2
February 3 Bought goods $12,000 paying by cheque
February 5 Bought goods $14,000 paying by cheque
February 7 Bought goods $10,000 paying in cash
February 8 Bought goods $14,000 paying by cheque
February 12 Bought goods $9,000 paying in cash
Assignment 4.2
Enter the transactions below in T accounts using double entry system
20X2
March 5 Bought goods $18,000 paying by cheque
March 7 Bought goods $16,000 paying by cheque
March 9 Bought goods $8,000 paying in cash
March 14 Bought goods $20,000 paying by cheque
March 20 Bought goods $6,000 paying in cash

6. 6
Assignment 4.3
Enter the transactions below in T accounts using double entry system
20X2
April 6 Bought goods $17,000 paying by cheque
April 7 Bought goods $21,000 paying by cheque
April 9 Bought goods $9,000 paying in cash
April 12 Bought goods $25,000 paying by cheque
April 16 Bought goods $6,000 paying in cash
Assignment 4.4
Enter the transactions below in T accounts using double entry system
20X2
May April 6 Bought goods $23,000 paying by cheque
May 8 Bought goods $25,000 paying by cheque
May 12 Bought goods $7,000 paying in cash
May 14 Bought goods $27,000 paying by cheque
May Bought goods $8,000 paying in cash
CREDIT PURCHASES
Not all purchases are paid for immediately, some are made on credit. Meaning
payment is done few days of months after the goods have been received. A
Creditor is therefore created.
A creditor is a current liability and is therefore expected to be paid within
12 months. Double entry is like this: Debit Purchases account and credit
creditor with the increase.
Example:
Enter the credit transactions below in double entry system
20X2
June 5 Bought goods on credit from Creative Juices $12,000
June 9 Bought goods on credit from V Cloud $17,000
June 13 Bought goods on credit from Clear View $18,000
June 19 Bought goods on credit from Narrow Gate $23,000
June 24 Bought goods on credit from Greener Pastures $28,000
20X2
June 5 Bought goods on credit from Creative Juices $12,000
June 9 Bought goods on credit from V Cloud $17,000
June 13 Bought goods on credit from Clear View $18,000
June 19 Bought goods on credit from Narrow Gate $23,000

7. 7
June 24 Bought goods on credit from Greener Pastures $28,000

8. 8
In the example below Purchases account has increased by $12,000 and
Creative Juices (creditor) has increased by $12,000.
Therefore debit Purchases account with $12,000 and credit Creative Juices
account with $12,000.
20X2
June 5 Bought goods on credit from Creative Juices $12,000
June 9 Bought goods on credit from V Cloud $17,000
June 13 Bought goods on credit from Clear View $18,000
June 19 Bought goods on credit from Narrow Gate $23,000
June 24 Bought goods on credit from Greener Pastures $28,000
In the example below Purchases account has increased by $17,000 and V
Cloud (creditor) has increased by $17,000.
Therefore debit Purchases account with $17,000 and credit V Cloud account
with $17,000.
20X2
June 5 Bought goods on credit from Creative Juices $12,000
June 9 Bought goods on credit from V Cloud $17,000
June 13 Bought goods on credit from Clear View $18,000
June 19 Bought goods on credit from Narrow Gate $23,000
June 24 Bought goods on credit from Greener Pastures $28,000

9. 9
In the example below Purchases account has increased by $18,000 and Clear
View (creditor) has increased by $18,000.
Therefore debit Purchases account with $18,000 and credit Clear View
account with $18,000.
20X2
June 5 Bought goods on credit from Creative Juices $12,000
June 9 Bought goods on credit from V Cloud $17,000
June 13 Bought goods on credit from Clear View $18,000
June 19 Bought goods on credit from Narrow Gate $23,000
June 24 Bought goods on credit from Greener Pastures $28,000
In the example below Purchases account has increased by $23,000 and Narrow
Gate (creditor) has increased by $23,000.
Therefore debit Purchases account with $23,000 and credit account of
Narrow Gate with $23,000.
20X2
June 5 Bought goods on credit from Creative Juices $12,000
June 9 Bought goods on credit from V Cloud $17,000
June 13 Bought goods on credit from Clear View $18,000

10. 10
June 19 Bought goods on credit from Narrow Gate $23,000
June 24 Bought goods on credit from Greener Pastures $28,000
In the example below Purchases account has increased by $28,000 and
Greener Pastures (creditor) has increased by $28,000.
Therefore debit Purchases account with $28,000 and credit Greener Pastures
account with $28,000.
Assignment 5.1
Enter the transactions below in T accounts using double entry system
20X2
July 6 Bought goods on credit from K Jade $14,000
July 9 Bought goods on credit from Flood Gates $19,000
July 14 Bought goods on credit from J Glitz $26,000
July 18 Bought goods on credit from Z Kind $27,000
July 21 Bought goods on credit from H Handy $30,000
Assignment 5.2
Enter the transactions below in T accounts using double entry system
20X2
August 7 Bought goods on credit from K Rad $17,000
August 9 Bought goods on credit from J Hood $24,000
August 13 Bought goods on credit from J Glitz $26,000
August 16 Bought goods on credit from P Smiles $29,000
August 23 Bought goods on credit from Y Mood $34,000

11. 11
Assignment 5.3
Enter the transactions below in T accounts using double entry system
20X2
September 6 Bought goods on credit from M. Deeds $24,000
September 11 Bought goods on credit from E. Vote $21,000
September 14 Bought goods on credit from B. Monday $16,000
September 17 Bought goods on credit from T. Windy $18,000
September 21 Bought goods on credit from L. Moody $15,000
Assignment 5.4
Enter the transactions below in T accounts using double entry system
20X2
October 10 Bought goods on credit from B. Daddy $17,000
October 14 Bought goods on credit from I. Greedy $24,000
October 17 Bought goods on credit from J. Slim $19,000
October 23 Bought goods on credit from K. Fled $21,000
October 26 Bought goods on credit from L. Flash $11,000
Assignment 5.5
Enter the transactions below in T accounts using double entry system
20X2
November 4 Bought goods on credit from D. Plat $15,000
November 6 Bought goods on credit from S. Moon $27,000
November 9 Bought goods on credit from M. Wells $16,000
November 14 Bought goods on credit from A. Fong $22,000
November 17 Bought goods on credit from R. Flog $11,000
Assignment 5.6
Enter the transactions below in T accounts using double entry system
20X2
September 4 Sold goods on credit to L. Mid $11,000
September 7 Sold goods on credit to G. Mine $13,000
September 9 Sold goods on credit to H. Hank $15,000
September 11 L. Mid returned goods valued at $1,200
September 15 Returns from H. Hank $2,400

12. 12
SALES RETURNS/RETURNS INWARDS
When goods are returned by customers after making a sale, they are called
return inwards or sales returns
Here goods are returned back into the business by debtors. Reasons for the
return can be any of the reasons already provided.
When goods are returned by customers after being sold to customers, double
entry is like this:
 Debit returns inwardsaccount
 Credit debtors account
Worked example:
20X2
September 4 Sold goods on credit to L. Mid $11,000
September 7 Sold goods on credit to G. Mine $13,000
September 9 Sold goods on credit to H. Hank $15,000
September 11 L. Mid returned goods valued at $1,200
September 15 Returns from H. Hank $2,400
September 4 Sold goods on credit to L. Mid $11,000
September 7 Sold goods on credit to G. Mine $13,000
September 9 Sold goods on credit to H. Hank $15,000
September 11 L. Mid returned goods valued at $1,200
September 15 Returns from H. Hank $2,400
In the example below L. Mid (debtor account) has increased by $11,000
and sales account has increased by $11,000.
Therefore debitL. Mid with $11,000 and credit sales account with $11,000.
September 4 Sold goods on credit to L. Mid $11,000
September 7 Sold goods on credit to G. Mine $13,000
September 9 Sold goods on credit to H. Hank $15,000
September 11 L. Mid returned goods valued at $1,200
September 15 Returns from H. Hank $2,400

13. 13
In the example below G. Min (debtor account) has
increased by $13,000 and sales account has increased
by $13,000. Therefore debit G. Min with $13,000 and
credit sales account with $13,000.
September 4 Sold goods on credit to L. Mid $11,000
September 7 Sold goods on credit to G. Mine $13,000
September 9 Sold goods on credit to H. Hank $15,000
September 11 L. Mid returned goods valued at $1,200
September 15 Returns from H. Hank $2,400
In the example below H. Hank (debtor account) has
increased by $15,000 and sales account has increased
by $15,000. Therefore debit H. Hank with $15,000 and
credit sales account with $15,000.
September 4 Sold goods on credit to L. Mid $11,000
September 7 Sold goods on credit to G. Mine $13,000
September 9 Sold goods on credit to H. Hank $15,000
September 11 L. Mid returned goods valued at $1,200
September 15 Returns from H. Hank $2,400

14. 14
In the example below Returns Inwards account has increased by
$1,200 and L. Mid (debtors account) has decreased by $1,200.
Therefore debit Returns inwards with $1,200 and credit L. Mid
with $1,200.
September 4 Sold goods on credit to L. Mid $11,000
September 7 Sold goods on credit to G. Mine $13,000
September 9 Sold goods on credit to H. Hank $15,000
September 11 L. Mid returned goods valued at $1,200
September 15 Returns from H. Hank $2,400
In the example below Returns Inwards account has increased
by $2,400 and H. Hank (debtors account) has decreased by
$2,400. Therefore debit Returns inwards with $2,400 and
credit H. Hank with $2,400.
Assignment 6.1
Enter the transactions below in T accounts using double entry system
20X3
January 5 Sold goods on credit to L. Stone $17,000
January 9 Sold goods on credit to J. Meek $23,000
January 13 Returns from L. Stone $1,700
January 16 Sold goods on credit to T. Green $26,000
January 17 Returns from J. Meek $2,500

15. 15
Assignment 6.2
Enter the transactions below in T accounts using double entry system
20X3
February 7 Sold goods on credit to K. Song $21,000
February 11 Sold goods on credit to G. Straight $27,000
February 13 Returns from K. Song $1,900
February 16 Sold goods on credit to C. Moody $23,000
February 20 Returns from G. Straight $2,700
Assignment 6.3
Enter the transactions below in T accounts using double entry system
20X3
March 2 Sold goods on credit to P. Flimsy $24,000
March 5 Sold goods on credit to K. Ford $22,000
March 8 Returns from P. Flimsy $2,100
March 11 Sold goods on credit to R. Green $26,000
March 14 Returns from K. Ford $3,100
Assignment 6.4
Enter the transactions below in T accounts using double entry system
20X3
April 5 Sold goods on credit to D. Lake $17,000
April 7 Sold goods on credit to Y. Ming $23,000
April 9 Returns from D. Lake $2,400
April 12 Sold goods on credit to K. Bright $28,000
April 15 Returns from K. Bright $3,300
Assignment 6.5
Enter the transactions below in T accounts using double entry system
20X3
May 7 Sold goods on credit to D. Love $19,000
May 10 Sold goods on credit to R. Fong $25,000
May 13 Returns from D. Love $2,600
May 17 Sold goods on credit to K. Brave $26,000
April 15 Returns from R. Fong $3,500

16. 16
RETURNS OUTWARDS
Here goods are returned to suppliers by the business. Reasons for the return can
be any of the reasons already provided. When goods are returned by the
business to its suppliers after purchase, they are calledreturn outwards or
purchases returns
When goods are returned by the business after being purchased, double entry is
like this:
o Debit returns creditors account
o Credit Returns outwards account
Worked example:
20X2
June 5 Bought goods on credit from L Song $14,000
June 9 Bought goods on credit from G. Christine $17,000
June 13 Returned goods to L. Song $2,000
June 16 Returns to G. Christine $2,400
June 19 Bought goods on credit from L. Song $12,000
In the example below Purchases account has increased by $14,000 and L. Song
(creditor account) has increased by $14,000. Therefore debit Purchases account
with $14,000 and credit L. Song $14,000.
20X2
June 5 Bought goods on credit from L Song $14,000
June 9 Bought goods on credit from G. Christine $17,000
June 13 Returned goods to L. Song $2,000
June 16 Returns to G. Christine $2,400
June 19 Bought goods on credit from L. Song $12,000
In the example below Purchases account has increased by $17,000 and G.
Christine (creditor account) has increased by $17,000. Therefore debit
Purchases account with $17,000 and credit G. Christine $17,000.

17. 17
20X2
June 5 Bought goods on credit from L Song $14,000
June 9 Bought goods on credit from G. Christine $17,000
June 13 Returned goods to L. Song $2,000
June 16 Returns to G. Christine $2,400
June 19 Bought goods on credit from L. Song $12,000
In the example below Returns outwards account has increased by $2,000
and L. Song (creditor account) has decreased by $2,000. Therefore debit
L. Song with $2,000 and credit Returns outwards with $2,000.
20X2
June 5 Bought goods on credit from L Song $14,000
June 9 Bought goods on credit from G. Christine $17,000
June 13 Returned goods to L. Song $2,000
June 16 Returns to G. Christine $2,400
June 19 Bought goods on credit from L. Song $12,000
In the example below Returns outwards account has increased by $2,400
and G. Christine (creditor account) has decreased by $2,400. Therefore
debit G. Christine with $2,400 and credit Returns outwards with $2,400.

18. 18
20X2
June 5 Bought goods on credit from L Song $14,000
June 9 Bought goods on credit from G. Christine $17,000
June 13 Returned goods to L. Song $2,000
June 16 Returns to G. Christine $2,400
June 19 Bought goods on credit from L. Song $12,000
In the example below Purchases account has increased by $12,000
and L. Song (creditor account) has increased by $12,000. Therefore
debit Purchases with $12,000 and credit L. Song with $12,000.
 Assignment 7.1
Enter the transactions below in T accounts using double entry system
20X3
March 3 Bought goods on credit from E. Fog $21,000
March 7 Bought goods on credit from Y. Moon $25,000
March 12 Bought goods on credit from B. Jones $26,000
March 17 Goods returned to E. Fog $2,000
March Goods returned to B. Jones $3,100 Bought goods on credit from Y.
Moon $16,000
 Assignment 7.2
Enter the transactions below in T accounts using double entry system
20X3
April 5 Bought goods on credit from T. Jackson $26,000
April 9 Bought goods on credit from J. Strick $28,000
April 13 Goods returned to T. Jackson $3,000
April 14 Goods returned to T. Jacksons $6,000
April 19 Bought goods from J. Strick $22,000
April 23 Bought goods on credit from T. Jackson $10,000


19. 19
 Assignment 7.19
Enter the transactions below in T accounts using double entry system
20X3
May 6 Bought goods on credit from A. Blake $18,000
May 9 Bought goods on credit from R. Fig $15,000
May 13 Goods returned to A. Blake $3,000
May 17 Bought goods on credit from A. Blake $14,000
May 22 Goods returned to R. Fig $2,900
May 26 Bought goods on credit from R. Fig $13,000
 Assignment 7.4
Enter the transactions below in T accounts using double entry system
20X3
June 7 Bought goods on credit from J. Wong $24,000
June 10 Bought goods on credit from K. Cross $14,000
June 14 Goods returned to J. Wong $3,300
June 16 Bought goods on credit from Q. Max $17,000
June 19 Bought goods on credit from Q. Max $19,000
June 23 Goods returned to K. Cross $3,300
 Assignment 7.5
Enter the transactions below in T accounts using double entry system
20X3
July 3 Bought goods on credit from J. Slim $26,000
July 6 Bought goods on credit from P. Bright $24,000
July 8 Goods returned to J. Slim $2,700
July 13 Bought goods on credit from G. Bite $23,000
July 16 Goods returned to P. Bright $2,800
July 21 Bought goods on credit from J. Slim $19,000

20. 20
ABOUT THE AUTHOR
Davie Kaliu was born and raised in Malawi, a country
in the southern part of Africa.
He is married to Lucina and together they have three
children, two boys; Tony and Davie Jr, and a girl
Evalister. He also looks after three high school
children.
He studied accounting and spent early years of his
carrier as a high school accounting teacher.
When he is not writing books, he is writing poetry or
growing vegetables
He has plans to write computer and fiction books.
More books coming your way, get ready.
+265 881123815
kaliudavie2018@gmail.com
dkaliu@yahoo.com
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 Depreciation of fixed assets.
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