Question 91 Chapter 4 of +2-B
Trade Receivables Turnover Ratio
91. Calculate Trade Receivables Turnover Ratio in each of the following
alternative cases:
Case 1: Net Credit Sales 4,00,000; Average Trade Receivables 1,00,000.
Case 2: Revenue from Operations Net Sales 30,00,000; Cash Revenue from
Operations, i.e., Cash Sales 6,00,000; Opening Trade Receivables
2,00,000; Closing Trade Receivables 6,00,000.
Case 3: Cost of Revenue from Operations or Cost of Goods Sold 3,00,000;
Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening
Trade Receivables 50,000; Closing Trade Receivables 1,00,000.
Case 4: Cost of Revenue from Operations or Cost of Goods Sold 4,50,000;
Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales,
Opening Trade Receivables 90,000; Closing Trade Receivables 60,000.
The solution of Question 91 Chapter 4 of +2-B: –
Case I :
| Trade Receivables Turnover Ratio | = | Net Credit Sales |
| Average Trade Receivable |
| 3 | = | Rs. 4,00,000 |
| Rs. 1,00,000 | ||
| = | 4 Times |
Case II :
| Net Credit Sales | = | Total Sales −Cash Sales |
| = | Rs. 30,00,000 – Rs. 6,00,000 | |
| = | Rs. 24,00,000 |
| Average Trade Receivable | = | Opening Trade Receivable + Closing Trade Receivable |
| 2 |
| = | Rs. 2,00,000 + Rs. 6,00,000 | |
| 2 | ||
| Trade Receivables Turnover Ratio | = | Net Credit Sales |
| Average Trade Receivable | ||
| = | Rs. 24,00,000 | |
| Rs. 4,00,000 | ||
| = | 6 Times |
Case III :
| Cost of Goods Sold | = | Rs. 3,00,000 | |
| Gross Profit | = | 25% on Cost | |
| Gross Profit | = | 25 | XRs.3,00,000 |
| 100 | |||
| Rs. 75,000 | |||
| = | Cost of Goods Sold + Gross Profit | ||
| = | Rs. 3,00,000 + Rs. 75,000 | ||
| = | Rs. 3,75,000 | ||
| Cash Sales | = | 20% of Total Sales | |
| Gross Profit | = | 25% on Cost | |
| Cash Sales | = | 20 | XRs.3,75,000 |
| 100 | |||
| = | Rs. 75,000 | ||
| Credit Sales | = | Total Sales − Cash Sales | |
| = | Rs. 3,75,000 – Rs. 75,000 | ||
| = | Rs. 3,00,000 |
| Average Trade Receivable | = | Opening Trade Receivable + Closing Trade Receivable |
| 2 | ||
| = | Rs. 50,000 + Rs. 1,00,000 | |
| 2 | ||
| = | Rs. 75,000 | |
| Trade Receivables Turnover Ratio | = | Net Credit Sales |
| Average Trade Receivable | ||
| X | = | Rs. 3,00,000 |
| Rs. 75,000 | ||
| = | 4 Times |
Case IV
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Sales = X
| Cash Sales | = | X | x | 20 |
| 100 | ||||
| = | 20x | |||
| 100 |
Sales = Cost of goods Sold + Gross Profit
| X | = | 4,50,000 | + | 20x |
| 100 |
| X x 100 | = | Rs. 4,50,000 x 100 + 20x |
| 100x | = | Rs. 4,50,00,000 + 20x |
| 100x – 20x | = | Rs. 4,50,00,000 |
| 80x | = | Rs. 4,50,00,000 |
| X | = | Rs. 4,50,00,000 |
| 80 | ||
| = | Rs. 5,62,000 | |
| Credit Sales | = | Y |
| Cash Sales | = | Y | x | 20 |
| 100 | ||||
| = | 20y | |||
| 100 |
Sales = Cash Sales + Credit Sales
| Rs. 5,62,000 | = | 25y | +y |
| 100 |
| Rs. 5,62,000 | = | 25y |
| 100 | ||
| Rs. 5,62,500X 100 | = | 125y |
| 125y | = | Rs.5,62,50,000 |
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| = | Rs. 5,62,50,000 | |
| 125 | ||
| = | Rs. 4,50,000 |
| Average Trade Receivable | = | Opening Trade Receivable + Closing Trade Receivable |
| 2 | ||
| = | Rs. 90,000 + Rs. 60,000 | |
| 2 | ||
| = | Rs. 75,000 | |
| Trade Receivables Turnover Ratio | = | Net Credit Sales |
| Average Trade Receivable | ||
| X | = | Rs. 4,50,000 |
| Rs. 75,000 | ||
| = | 4 Times |
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)
- 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
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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