Question 55 Chapter 4 of +2-B

Question 55 Chapter 4 of +2-B

III. Activity Ratios

Trade Receivable 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.

 

The solution of Question 55 Chapter 4 of +2-B: – 

Gross profit=20% on sales
Cost of goods sold=80% of sales
Sales=Cost of goods sold + Profit
 =₹ 80+ ₹ 20
Cost of goods sold=80X60,000
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


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

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 3 min 225x300 - Question 55 Chapter 4 of +2-B  - USHA Publication  12 Class
T.S. Grewal’s Analysis of Financial Statements

Leave a Reply

About us

About us, we are here to improve your knowledge in all financial & Business related topics and to get better carrier opportunities. The author has about 10-year Experience in tuition Business. It is very difficult to teach a large number of students with a personal touch or in a classroom. 

Animation's Resource websites

All Icons and images used on my website were downloaded from the following website please go and download free:-

close