Net Credit Purchases Formula

In order to find out Credit Purchases or Purchases on Account, Net Credit Purchases Formula is used which is shown below:

Net Credit Purchases = Credit Purchases - (Purchases Returns & Allowances + Purchases Discounts)

Here Purchases Returns and Purchases are Contra Expense Accounts for credit purchases account.

For Example, if Credit Purchases = Rs.300000, Purchases Returns = Rs. 30000 and Purchases Allowances = Rs. 10000, then by applying the Net Credit Purchases Formula, we get:

Net Credit Purchases = 300000 - 30000 - 10000 = Rs. 260000