Total purchases 3 00 000 Cash purchases 30 000 Purchase returns 51 000 Creditors at end 1 05 000 Res...........

Costing - Phase (I & II) Methods of Costing

Total purchases: 3,00,000/-

Cash purchases:30,000/-

Purchase returns:51,000/-

Creditors at end: 1,05,000/-

Reserve for discount on creditors: 60,000/-

Average Payment Period will be:

205 days

200 days

275 days

None of the above

Average Payment Period=

Trade Creditors x number of working days in year/Net Annual Credit Purchases

= (1,05,000 + 60,000)/(2,19,000) x 365= 275 days

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