Gce Model Questions Vol1 2017 Financial Accounting Question 40

The ledger of a merchant contains the following opening balances (debit unless stated):\n\n- Purchases Account: Debit ₦60,000\n- Sales Account: Credit ₦80,000\n- Returns Inwards (Sales Returns): Debit ₦5,000\n- Returns Outwards (Purchase Returns): Credit ₦3,000\n- Discount Received: Credit ₦2,000\n- Discount Allowed: Debit ₦1,500\n\nDuring the year the following transactions occurred:\n\na) Additional purchases on credit of ₦20,000.\nb) Additional sales on credit of ₦30,000.\nc) Cash received from customers totalled ₦70,000, of which ₦4,000 were discounts allowed.\nd) Cash paid to suppliers totalled ₦55,000, of which ₦1,200 were discounts received.\n\nUsing the ledger information, calculate the net profit for the year and state the closing balance (debit or credit and amount) of the Purchases Account after accounting for purchase returns and discounts.