Question 89 Chapter 4 of +2-B - T.S. Grewal 12 Class

Question 89 Chapter 4 of +2-B

Trade Receivables Turnover Ratio

89. Cash Revenue from Operations Cash Sales Rs. 2,00,000, Cost of Revenue from Operations or Cost of Goods Sold Rs. 3,50,000; Gross Profit Rs. 1,50,000; Trade Receivables Turnover Ratio 3 Times.
Calculate Opening and Closing Trade Receivables in each of the following alternative cases;
Case 1: If Closing Trade Receivables were Rs. 1,00,000 in excess of Opening Trade Receivables.
Case 2: If trade Receivables at the end were 3 times than in the beginning.
Case 3; If Trade Receivables at the end were 3 times more than that of in the beginning

 

The solution of Question 89 Chapter 4 of +2-B: -

Total Sales	=	Cost of Goods Sold + Gross Profit
	=	Rs. 3,50,000 + Rs. 1,50,000
	=	Rs. 5,00,000
Credit Sales	=	Total Sales − Cash Sales
	=	Rs. 5,00,000 − Rs. 2,00,000
	=	Rs. 3,00,000

 

Trade Receivables Turnover Ratio	=	Credit Sales
		Average Trade Receivable

3	=	Rs. 3,00,000
		Average Trade Receivable
	=	Rs. 3,00,000
		3
Average Trade Receivable	=	Rs. 1,00,000
Opening Trade Receivables	=	X
Closing Trade Receivables	=	x + Rs. 1,00,000

 

Average Trade Receivable	=	Opening Trade Receivable + Closing Trade Receivable
		2

Rs. 1,00,000	=	X + (x+ Rs. 1,00,000)
		2
Rs. 2,00,000	=	2x + Rs. 1,00,000
2x		Rs. 2,00,000 – Rs. 1,00,000
2x		Rs. 1,00,000
	=	Rs. 1,00,000
		2
X	=	Rs. 50,000
Opening Trade Receivables	=	Rs. 50,000
Closing Trade Receivables	=	Rs. 50,000 + 1,00,000
	=	Rs. 1,50,000

 

Opening Trade Receivables	=	X
Closing Trade Receivables	=	3x
Average Trade Receivable	=	Opening Trade Receivable + Closing Trade Receivable
		2
Rs. 1,00,000	=	X + 3x
		2
Rs. 2,00,000	=	4x
4x	=	Rs. 2,00,000
X	=	Rs. 2,00,000
		4
X	=	Rs. 50,000
Opening Trade Receivables	=	Rs. 50,000
Closing Trade Receivables	=	Rs. 50,000 X 3
	=	Rs. 1,50,000

 

 

Opening Trade Receivables	=	X
Closing Trade Receivables	=	X + 3x
Average Trade Receivable	=	Opening Trade Receivable + Closing Trade Receivable
		2
Rs. 1,00,000	=	x + (x + 3x)
		2
Rs. 2,00,000	=	5x
4x	=	Rs. 2,00,000
X	=	Rs. 2,00,000
		5
X	=	Rs. 40,000
Opening Trade Receivables	=	Rs. 40,000
Closing Trade Receivables	=	Rs. 40,000 X 4
	=	Rs. 1,60,000

 

 

 

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Also, Check out the solved question of previous Chapters: -

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 - Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 - Accounting for Partnership Firms - Fundamentals
• Chapter No. 3 - Goodwill: Nature and Valuation
• Chapter No. 4 - Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 - Admission of a Partner
• Chapter No. 6 - Retirement/Death of a Partner
• Chapter No. 7 - Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 - Company Accounts -  Accounting for Share Capital
• Chapter No. 9 - Company Accounts - Issue of Debentures
• Chapter No. 10 - Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 - Financial Statements of a Company
• Chapter No. 2 - Financial Statement Analysis 
• Chapter No. 3 - Tools of Financial Statement Analysis - Comparative Statements and Common- Size Statements
• Chapter No. 4 - Accounting Ratios
• Chapter No. 5 - Cash Flow Statement

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