107 :- Rs 1,75,000 is the Credit Revenue from Operations I.e, Net Credit Sales of an enterprise. If Trade Receivable 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 :-
Credit Revenue from Operations = Rs 1,75,000
Let the Trade Receivables in the beginning be x
Closing Trade Receivables = x + 7,000
Trade Receivable Turnover Ratio = Net Credit Revenue from Operations/Average Trade Receivable
8 = 1,75,000/[(x + x + 7,000)/2]
8 = 3,50,000/2x + 7,000
16x + 56,000 = 3,50,000
16x = 2,94,000
x = 18,375
Opening Trade Receivables = Rs 18,375
Closing Trade Receivables = 18,375 + 7,000
= Rs 25,375