Accountancy

Revenue from Operations: Cash Sales Rs. 5,00,000; Credit Sales Rs. 6,00,000; Sales Return Rs. 1,00,000. Current Assets Rs. 3,00,000; Current Liabilities Rs. 1,00,000. Calculate Working Capital Turnover Ratio.

SOLUTION Net Sales = Cash Sales + Credit Sales − Sales Returns= 5,00,000 + 6,00,000 − 1,00,000= 10,00,000 Working Capital = Current Assets - Current Liabilities Working Capital Turnover =  Net sales /  Working Capital=…

Continue ReadingRevenue from Operations: Cash Sales Rs. 5,00,000; Credit Sales Rs. 6,00,000; Sales Return Rs. 1,00,000. Current Assets Rs. 3,00,000; Current Liabilities Rs. 1,00,000. Calculate Working Capital Turnover Ratio.

From the following information, calculate Working Capital Turnover Ratio:

 ParticularsAmount(Rs.)Cost of Revenue from Operations (Cost of Goods Sold)10,00,000Current Assets5,00,000Current Liabilities3,00,000 SOLUTION Working Capital = Current Assets – Current Liabilities= 5,00,000 – 3,00,000= 2,00,000Working Capital Turnover Ratio = Cost of Goods Sold…

Continue ReadingFrom the following information, calculate Working Capital Turnover Ratio:

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 Rs. 90,000. Case 2: Opening Trade Payables Rs. 15,000; Closing Trade Payables Rs. 45,000; Net Purchases Rs. 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.

SOLUTION Case 1 Net Credit Purchases = Net Purchases − Cash Purchases= 3,60,000 − 90,000= 2,70,000 Trade Payables Turnover Ratio = Net Credit Purchases / Closing Trade Payables= 2,70,000 / 45,000= 6 timesCase 2 Net Purchases = 3,60,000Average Trade Payables = Opening Trade Payables + Closing Trade Payables / 2= 15,000 + 45,000 / 2= 30,000Trade Payables Turnover Ratio = Net Credit Purchases…

Continue ReadingCalculate 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 Rs. 90,000. Case 2: Opening Trade Payables Rs. 15,000; Closing Trade Payables Rs. 45,000; Net Purchases Rs. 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.

Calculate Trade payables Turnover Ratio from the following information: Opening Creditors Rs. 1,25,000; Opening Bills Payable Rs. 10,000; Closing Creditors Rs. 90,000; Closing bills Payable Rs. 5,000; Purchases Rs. 9,50,000; Cash Purchases Rs. 1,00,000; Purchases Return Rs. 45,000.

SOLUTION Net Credit Purchases = Purchases – Cash Purchases – Purchase Return= 9,50,000 – 1,00,000 – 45,000= Rs. 8,05,000 Average Trade Payables = Opening Creditors & Bills payables + Closing Creditors & Bills payables / 2= 1,25,000 + 10,000 + 90,000 +5,000 / 2 = Rs. 1,15,000 Trade Payables turnover ratio=  8,05,000 / 115000 =  7 Times

Continue ReadingCalculate Trade payables Turnover Ratio from the following information: Opening Creditors Rs. 1,25,000; Opening Bills Payable Rs. 10,000; Closing Creditors Rs. 90,000; Closing bills Payable Rs. 5,000; Purchases Rs. 9,50,000; Cash Purchases Rs. 1,00,000; Purchases Return Rs. 45,000.

Calculate Trade Payables Turnover Ratio and Average Debt payment Period from the following information: 

Particulars 1st April, 2018 Amount (Rs.)31st March, 2019 Amount (Rs.)Sundry Creditors1,50,0004,50,000Bills Payable50,0001,50,000 Total Purchases Rs. 21,00,000; Purchases Return Rs. 1,00,000; Cash Purchases Rs. 4,00,000. SOLUTION Average Trade Payables Opening Creditors & B/P + Closing Creditors & B/P2 = 1,50,000 + 50,000 + 4,50,000 + 1,50,0002 = Rs. 4,00,000   Net Credit Purchases Total Purchases - Purchases Return - Cash Purchases = 21,00,000 - 1,00,000 - 4,00,000 = Rs. 16,00,000   Trade Payables Turnover RatioNet Credit Purchases Average Trade Payables  = 16,00,000 / 4,00,000 = 4 times   Average Debt Payment Period  12 / Trade Payable Turnover Ratio = 12 /…

Continue ReadingCalculate Trade Payables Turnover Ratio and Average Debt payment Period from the following information: 

From the information given below, calculate Trade Receivables Turnover Ratio: Credit Revenue from Operations, i.e., Credit Sales Rs. 8,00,000; Opening Trade Receivables Rs. 1,20,000; and Closing Trade Receivables Rs. 2,00,000. State giving reason, which of the following would increase, decrease or not change Trade Receivables Turnover Ratio: (i) Collection from Trade Receivables Rs. 40,000. (ii) Credit Revenue from Operations, i.e., Credit Sales Rs. 80,000. (iii) Sales Return Rs. 20,000. (iv) Credit Purchase Rs. 1,60,000.

SOLUTION Average Trade receivables = Opening Trade Receivables + Closing Trade Receivables / 2Average Trade receivables = 1,20,000 + 2,00,000 / 2= 1,60,000 Trade receivable turnover ratio = Net sales…

Continue ReadingFrom the information given below, calculate Trade Receivables Turnover Ratio: Credit Revenue from Operations, i.e., Credit Sales Rs. 8,00,000; Opening Trade Receivables Rs. 1,20,000; and Closing Trade Receivables Rs. 2,00,000. State giving reason, which of the following would increase, decrease or not change Trade Receivables Turnover Ratio: (i) Collection from Trade Receivables Rs. 40,000. (ii) Credit Revenue from Operations, i.e., Credit Sales Rs. 80,000. (iii) Sales Return Rs. 20,000. (iv) Credit Purchase Rs. 1,60,000.

Calculate Trade Receivables Turnover Ratio in each of the following alternative cases: Case 1: Net Credit Sales Rs. 4,00,000; Average Trade Receivables Rs. 1,00,000. Case 2: Revenue from Operations (Net Sales) Rs. 30,00,000; Cash Revenue from Operations, i.e., Cash Sales  Rs. 6,00,000; Opening Trade Receivables  Rs. 2,00,000; Closing Trade Receivables Rs. 6,00,000. Case 3: Cost of Revenue from Operations or Cost of Goods Sold Rs. 3,00,000; Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening Trade Receivables Rs. 50,000; Closing Trade Receivables Rs. 1,00,000. Case 4: Cost of Revenue from Operations or Cost of Goods Sold Rs. 4,50,000; Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables Rs. 90,000; Closing Trade Receivables Rs. 60,000.

SOLUTION Case 1Trade receivable turnover ratio = Net sales / Debtors + Bills receivableTrade receivable turnover ratio = 4,00,000 / 1,00,000= 4 Times Case 2 Net Credit Sales = Total Sales…

Continue ReadingCalculate Trade Receivables Turnover Ratio in each of the following alternative cases: Case 1: Net Credit Sales Rs. 4,00,000; Average Trade Receivables Rs. 1,00,000. Case 2: Revenue from Operations (Net Sales) Rs. 30,00,000; Cash Revenue from Operations, i.e., Cash Sales  Rs. 6,00,000; Opening Trade Receivables  Rs. 2,00,000; Closing Trade Receivables Rs. 6,00,000. Case 3: Cost of Revenue from Operations or Cost of Goods Sold Rs. 3,00,000; Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening Trade Receivables Rs. 50,000; Closing Trade Receivables Rs. 1,00,000. Case 4: Cost of Revenue from Operations or Cost of Goods Sold Rs. 4,50,000; Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables Rs. 90,000; Closing Trade Receivables Rs. 60,000.

From the following information, calculate Opening and Closing Trade Receivables, if Trade Receivables Turnover Ratio is 3 Times: (i) Cash Revenue from Operations is 1/3rd of Credit Revenue from Operations. (ii) Cost of Revenue from Operations is Rs. 3,00,000. (iii) Gross Profit is 25% of the Revenue from Operations. (iv) Trade Receivables at the end are 3 Times more than that of in the beginning. 

SOLUTION Trade Receivable Turnover Ratio Credit Revenue from Operations /Average Trade Receivables3 3,00,000  / Average Trade ReceivablesAverage Trade Receivables = 3,00,000 / 3= Rs. 1,00,000Average Trade ReceivablesOpening Trade Receivables + Closing  Trade Receivables / 21,00,000 = x + 4x / 2 So,  x would be Rs. 40,000∴Opening receivables would be  Rs. 40,000 and, Closing Receivables would be Rs. 1,60,000(40,000 × 4) Revenue from Operations= 3,00,000 + 25 / 75 × 3,00,000= Rs. 4,00,000Credit Revenue from OperationsTotal Revenue from Operations…

Continue ReadingFrom the following information, calculate Opening and Closing Trade Receivables, if Trade Receivables Turnover Ratio is 3 Times: (i) Cash Revenue from Operations is 1/3rd of Credit Revenue from Operations. (ii) Cost of Revenue from Operations is Rs. 3,00,000. (iii) Gross Profit is 25% of the Revenue from Operations. (iv) Trade Receivables at the end are 3 Times more than that of in the beginning. 

A limited company made Credit Sales of Rs. 4,00,000 during the financial period. If the collection period is 36 days and year is assumed to be 360 days, calculate: (i) Trade Receivables Turnover Ratio; (ii) Average Trade Receivables; (iii) Trade Receivables at the end when Trade Receivables at the end are more than that in the beginning by Rs. 6,000.

SOLUTION (i)Debt collection period360 / trade receivable turnover ratio 36360 / Debtors turnover ratio  Trade receivable turnover ratio= 10(ii)Trade receivable turnover ratio Net Credit sales / Average trade receivable 104,00,000 / Average trade…

Continue ReadingA limited company made Credit Sales of Rs. 4,00,000 during the financial period. If the collection period is 36 days and year is assumed to be 360 days, calculate: (i) Trade Receivables Turnover Ratio; (ii) Average Trade Receivables; (iii) Trade Receivables at the end when Trade Receivables at the end are more than that in the beginning by Rs. 6,000.