Credit Purchases Formula

Credit Purchases Formula

Credit Purchases can be calculated by the following formula.

Credit Purchases= Closing Creditor Balance + Cash Paid – Opening Creditor Balance

Example

Creditor – Opening Balance =  30,000

Creditor – Closing Balance =   50,000

Cash Paid during Year=          80,000

Solution

Credit Sale= Closing Creditor Balance + Cash Paid – Opening Creditor Balance

= 40,000+80,000-40,000

=90,000 (Credit Purchases)