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

Question 89 Chapter 4 of +2-B

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

 

 

 

Balance Sheet: Meaning, Format & Examples

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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)

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

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

2 Book 3 min 225x300 - Question 89 Chapter 4 of +2-B  - T.S. Grewal 12 Class
T.S. Grewal’s Analysis of Financial Statements

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