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Question 49 Chapter 14 of Class 12 Part – 2 – 2024
Trade Receivable Turnover Ratio
49. (Trade Receivable T/O Ratio when Provision for Doubtful Debt is given) ABC Ltd Provides the following information
| Trade Receivable in the beginning | ₹ 50,000 |
| Trade Receivable at the end | ₹ 30,000 |
| Cash sales during the year (Revenue from Operation) | ₹ 1,00,000 |
| Credit sales during the year (Revenue from Operation) | ₹ 2,50,000 |
| Return inwards | ₹ 10,000 |
| Provision for bad and doubtful debts | ₹ 5,000 |
| Trade Receivable Turnover Ratio | = | Net Credit annual sales |
| Average trade receivable | ||
| Net Credit Sales | = | Total Credit Sales – Sales Return |
| = | ₹ 2,50,000 - ₹ 10,000 | |
| = | ₹ 2,40,000 | |
| Average Trade Receivable | = | Trade Receivable in the beginning + Trade Receivable at the end |
| 2 |
| = | ₹ 50,000 + ₹ 30,000 | |
| 2 | ||
| Average trade receivable | = | ₹ 40,000 |
| Trade Receivable Turnover Ratio | = | ₹ 2,40,000 |
| ₹ 40,000 | ||
| = | 6 times |
| Average Collection Period | = | Number of days in the year |
| Trade Receivable turnover ratio | ||
| Average trade receivable | = | 360 |
| 6 | ||
| Average Collection Period | = | 60 Days |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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