Question 53 Chapter 4 of +2-B

III. Activity Ratios

53. (Opening Creditors when Trade Payable T/O Ratio & Closing Creditors are given) From the following information, calculate creditors at the beginning of the year :

 ₹ Total Purchases 22,00,000 Cash Purchases (included in above) 10,00,000 Trade Payable turnover ratio-4 times Creditors (closing) 2,50,000

## The solution of Question 53 Chapter 4 of +2-B: –

 Trade Payable Turnover ratio = Net credit Purchases Average Trade Payable Net credit Purchases = Total Purchases – Cash Purchases = ₹ 22,00,000 + ₹ 10,00,000 Account Payable = ₹ 12,00,000
 Average Trade Payable = Opening trade Payable + Closing Trade Payable 2 Average Trade Payable = Net credit Purchases Trade Payable Turnover ratio = ₹ 12,00,000 4 = ₹ 3,00,000 ₹ 3,00,000 = Opening trade Payable + ₹ 2,50,000 2 ₹ 3,00,000 x 2 = Opening trade Payable + ₹ 2,50,000 ₹ 6,00,000 = Opening trade Payable + ₹ 2,50,000 Opening trade Payable = ₹ 6,00,000 – ₹ 2,50,000 = ₹ 3,50,000

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