From the following information, calculate cash paid to creditors in second year. Total purchase Rs. 12,00,000 Sundry creditors : Year first Rs. 80,000 Year second Rs. 1,20,000

To calculate cash paid to creditors in the second year, we use the following formula:

$$\text{Cash Paid to Creditors}=\text{Total Purchases}+\text{Closing Creditors}-\text{Opening Creditors}$$

Given:

• Total purchases = Rs. 12,00,000
• Opening creditors (Year 1 closing) = Rs. 80,000
• Closing creditors (Year 2 closing) = Rs. 1,20,000

Substitute the values:

$$\text{Cash Paid to Creditors}=12,00,000+1,20,000-80,000$$

$$\text{Cash Paid to Creditors}=12,40,000-80,000$$

$$\text{Cash Paid to Creditors}=\text{Rs. 11,60,000}$$