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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