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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Mercury Ltd. made Credit Sales of ₹4,00,000 during the financial period. If the collection period is 36 days and the year is assumed to be 360 days, calculate:
(i) Trade Receivables Turnover Ratio;
(ii) Average Trade Receivables;
(iii) Trade Receivables at the end, when Trade Receivables at the end are more than that at the beginning by ₹6,000.
(i) Trade Receivables Turnover Ratio = Number of Days in a Year ÷ Collection Period = 360 ÷ 36 = 10 times
(ii) Average Trade Receivables
Trade Receivables Turnover Ratio = Credit Revenue from Operations ÷ Average Trade Receivables
10 = 4,00,000 ÷ Average Trade Receivables
Average Trade Receivables = 4,00,000 ÷ 10 = ₹40,000
(iii) Trade Receivables at the end
Let Opening Trade Receivables = x. Closing Trade Receivables = x + 6,000.
Average Receivables = (x + x + 6,000) ÷ 2
40,000 = (2x + 6,000) ÷ 2
80,000 = 2x + 6,000
x = ₹37,000 (Opening Trade Receivables)
Closing Trade Receivables = 37,000 + 6,000 = ₹43,000
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.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.104 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
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