Accountancy

A firm normally has trade Receivables equal to two months’ credit Sales. During the coming year it expects Credit Sales of Rs. 7,20,000 spread evenly over the year (12 months). What is the estimated amount of Trade Receivables at the end of the year?

SOLUTION Debt collection period 12 Month /  Debtors turnover ratio212 /  Debtors’ turnover ratioDebtors’ turnover ratio         = 6 Debtors’ turnover ratioCredit sales / Debtors (Closing )67,20,000 / Debtors (Closing )Debtors (Closing)=…

Continue ReadingA firm normally has trade Receivables equal to two months’ credit Sales. During the coming year it expects Credit Sales of Rs. 7,20,000 spread evenly over the year (12 months). What is the estimated amount of Trade Receivables at the end of the year?

Closing Trade Receivables Rs. 4,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables Rs. 2,00,000; Revenue from Operations, i.e., Revenue from Operations, i.e., Net Sales Rs. 15,00,000. Calculate Trade Receivables Turnover Ratio [(Hint:) 1.  Net Credit Sales = Total Sales − Cash Sales 2. Opening Trade Receivables = Closing Trade Receivables − Excess of Closing  Trade Receivables over Opening Trade Receivables.]

SOLUTION Let Credit Sales bexCash Sales25% of Credit SaleCash SalesCash Sales= x × 25 / 100= 25x / 100 Total SalesCash Sales + Credit Sales15,00,000= 25x / 100 + xOr,…

Continue ReadingClosing Trade Receivables Rs. 4,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables Rs. 2,00,000; Revenue from Operations, i.e., Revenue from Operations, i.e., Net Sales Rs. 15,00,000. Calculate Trade Receivables Turnover Ratio [(Hint:) 1.  Net Credit Sales = Total Sales − Cash Sales 2. Opening Trade Receivables = Closing Trade Receivables − Excess of Closing  Trade Receivables over Opening Trade Receivables.]

Closing Trade Receivables Rs. 1,20,000, Revenue from Operations Rs. 14,40,000. Provision for Doubtful Debts Rs. 20,000. Calculate Trade Receivables Turnover Ratio.

SOLUTION Closing Trade Receivables = Rs. 1,20,000Revenue from Operations = Rs. 14,40,000Since, opening trade receivables have not been given we assume closing trade receivables to be our average trade receivables.…

Continue ReadingClosing Trade Receivables Rs. 1,20,000, Revenue from Operations Rs. 14,40,000. Provision for Doubtful Debts Rs. 20,000. Calculate Trade Receivables Turnover Ratio.

From the following particulars, determine Trade Receivables Turnover Ratio:

 ParticularsAmount(Rs.)Revenue from Operations (Net Sales)10,00,000Credit Revenue from Operations (Credit Sales)8,00,000Trade Receivables1,00,000 SOLUTION Credit Sales = 8,00,000Average Debtors = 1,00,000Trade receivable turnover ratio = Net sales /  Average receivablesTrade receivable turnover…

Continue ReadingFrom the following particulars, determine Trade Receivables Turnover Ratio:

Rs. 1,75,000 is the Credit Revenue from Operations, i.e., Net Credit Sales of an enterprise. If Trade Receivables Turnover Ratio is 8 times, calculate Trade Receivables in the Beginning and at the end of the year. Trade Receivables at the end is Rs. 7,000 more than that in the beginning.

SOLUTION Trade Receivable Turnover Ratio = Net Credit Sales / Average Trade Receivables8 = 1,75,000 / Average Trade ReceivablesAverage Trade Receivables = Rs. 21,875Let Opening Trade Receivables = x∴ Closing…

Continue ReadingRs. 1,75,000 is the Credit Revenue from Operations, i.e., Net Credit Sales of an enterprise. If Trade Receivables Turnover Ratio is 8 times, calculate Trade Receivables in the Beginning and at the end of the year. Trade Receivables at the end is Rs. 7,000 more than that in the beginning.

Compute Trade Receivables Turnover Ratio from the following:

 Particulars31st March,  2018 (Rs.)31st March,  2019 (Rs.)Revenue from Operations (Net Sales)8,00,0007,00,000Debtors in the beginning of year83,0001,17,000Debtors at the end of year1,17,00083,000Sales Return1,00,00050,000 SOLUTION Average Debtors = Opening Debtors + Closing Debtors / 2In 2017 = 83,000 + 1,17,000 / 2 =…

Continue ReadingCompute Trade Receivables Turnover Ratio from the following:

Closing Trade Receivables Rs. 1,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables Rs. 40,000; Revenue from Operations, i.e., Net Sales Rs. 6,00,000. Calculate Trade Receivables Turnover Ratio.

SOLUTION Let Credit Sales be = xCash Sales = x + 25 / 100= 25x / 100 Total Sales = Cash Sales + Credit Sales6,00,000 = 25x / 100Or, 125x /…

Continue ReadingClosing Trade Receivables Rs. 1,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables Rs. 40,000; Revenue from Operations, i.e., Net Sales Rs. 6,00,000. Calculate Trade Receivables Turnover Ratio.

Calculate Trade Receivables Turnover Ratio from the following information:

Particulars31st March, 2018(Rs.)31st March, 2019(Rs.)Sundry Debtors28,00025,000Bills Receivable7,00015,000Provision for Doubtful Debts2,8002,500 Total Sales Rs. 1,00,000; Sales Return Rs. 1,500; Cash Sales Rs. 23,500. SOLUTION Net Credit Sales = Total Sales − Sales Return − Cash Sales= 1,00,000 −…

Continue ReadingCalculate Trade Receivables Turnover Ratio from the following information: