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Question 55 Chapter 14 of Class 12 Part – 2 – 2024
Trade Payable Turnover Ratio
55. (Net Purchases/Trade Payable T/O Ratio/Stock T/O Ratio & GP are given) Find out
(i) Net purchases (ii) Trade Payable turnover ratio
Gross profit on sales (Revenue from Operation) is 20% and the value of gross profit is ₹ 60,000 inventory turnover ratio is 6 times and the opening inventory is ₹ 8,000 less than the closing inventory. Opening sundry trade payable ₹ 40,000 and closing sundry trade payable is ₹ 50,000.
| Gross profit | = | 20% on sales |
| Cost of goods sold | = | 80% of sales |
| Sales | = | Cost of goods sold + Profit |
| = | ₹ 80+ ₹ 20 |
| Cost of goods sold | = | 80 | X | 60,000 |
| 20 | ||||
| = | ₹ 2,40,000 |
| Inventory Turnover Ratio | = | Cost of goods sold |
| Average inventory | ||
| 6 | = | 1,40,000 |
| Average inventory | ||
| Average Inventory | = | 2,40,000 |
| 6 | ||
| Average Inventory | = | ₹ 40,000 |
| Average Inventory | = | Opening Inventory + Closing Inventory |
| 2 | ||
| Let assume Closing Inventory | = | x |
| Opening Inventory | = | x - ₹ 8,000 |
| Average Inventory | = | (x - ₹ 8,000) + x |
| 2 | ||
| ₹ 40,000 | = | 2x - ₹ 8,000 |
| 2 | ||
| ₹ 40,000 x 2 | = | 2x - ₹ 8,000 |
| ₹ 80,000 | = | 2x - ₹ 8,000 |
| ₹ 80,000 + ₹ 8,000 | = | 2x |
| = | ₹ 88,000 | |
| 2 | ||
| Closing Inventory | = | ₹ 44,000 |
| Opening Inventory | = | Closing Inventory - ₹ 8,000 |
| = | ₹ 44,000 - ₹ 8,000 | |
| = | ₹ 36,000 |
(a) Computation of net purchases
| Cost of goods sold | = | Opening Inventory + Purchases - Closing Inventory |
| ₹ 2,40,000 | = | ₹ 36,000 + Purchases – ₹ 44,000 |
| Purchases | = | ₹ 2,40,000 + ₹ 8,000 |
| = | ₹ 2,48,000 |
(b) Accounts Payable Turnover Ratio
| = | Net Purchases (Credit) | |
| Average Accounts Payable | ||
| Average accounts payable | = | Opening accounts payable + Closing accounts payable |
| 2 | ||
| = | ₹ 40,000 + ₹ 50,000 | |
| 2 | ||
| = | ₹ 45,000 | |
| = | ₹ 2,48,000 | |
| Accounts Payable Turnover Ratio | ₹ 45,000 | |
| = | 5.51 times |
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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