Question 95 Chapter 4 of +2-B
Trade Receivables Turnover Ratio
95. Calculate Trade Payables Turnover Ratio for the year 2018-19 in each of the alternative cases:
Case 1: Closing Trade Payables Rs. 45,000; Net Purchases Rs. 3,60,000;
Purchases Return Rs. 60,000; Cash Purchases 90,000.
Case 2: Opening Trade Payables Rs. 15,000; Closing Trade Payables Rs.
45,000; Net Purchases 3,60,000.
Case 3: Closing Trade Payables Rs. 45,000; Net Purchases Rs. 3,60,000.
Case 4: Closing Trade Payables including Rs. 25,000 due to a supplier of
machinery Rs. 55,000; Net Credit Purchases Rs. 3,60,000.
The solution of Question 95 Chapter 4 of +2-B: –
Case I:
| Net Credit Purchases | = | Net Purchases − Cash Purchases |
| = | Rs. 3,60,000 – Rs. 90,000 | |
| = | Rs. 2,70,000 |
| Average Trade Receivable | = | Net Credit Purchase |
| Closing Trade Payables |
| = | Rs. 2,70,000 | |
| Rs. 45,000 | ||
| = | 6 Times |
Case II:
Net Credit Purchases = Rs. 3,60,000
| Average Trade Receivable | = | Opening Trade payables + Closing Trade Payables |
| 2 |
| = | Rs. 15,000 + Rs. 45,000 | |
| 2 | ||
| = | Rs. 30,000 | |
| Trade Receivables Turnover Ratio | = | Net Credit Sales |
| Average Trade Receivable | ||
| = | Rs. 3,60,000 | |
| Rs. 30,000 | ||
| = | 12 Times |
Case III:
| Trade Receivables Turnover Ratio | = | Net Credit Sales |
| Average Trade Receivable | ||
| = | Rs. 3,60,000 | |
| Rs. 45,000 | ||
| = | 8 Times |
Case IV:
| Net Credit Payables | = | Trade Payables – Creditors for Machinery |
| = | Rs. 55,000 – Rs. 25,000 | |
| = | Rs. 30,000 |
| Trade Receivables Turnover Ratio | = | Net Credit Sales |
| Average Trade Receivable | ||
| = | Rs. 3,60,000 | |
| Rs. 30,000 | ||
| = | 12 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
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