109 :- Cash Revenue from Operations (Cash Sales) Rs 2,00,000, Cost of Revenue from Operations or Cost of Goods Sold Rs 3,50,000; Gross Profit Rs 1,50,000; Trade Receivables Turnover Ratio 3 Times. Calculate Opening and Closing Trade Receivables in each of the following alternative cases :
Case 1 : If Closing Trade Receivables were Rs 1,00,000 in excess of Opening Trade Receivables.
Case 2 : If Trade Receivables at the end were 3 times than in the beginning.
Case 3 : If Trade Receivables at the end were 3 times more than that of in the beginning.
Solution :-
Gross Profit = Net Sales – Cost of Goods Sold
1,50,000 = Net Sales – 3,50,000
Net Sales = Rs 5,00,000
Net Sales = Cash Sales + Credit Sales
5,00,000 = 2,00,000 + Credit Sales
Net Credit Revenue from Operation (Credit Sales) = Rs 3,00,000
CASE 1
Let Opening Trade Receivable be x
Closing Trade Receivable = x + 1,00,000
Trade Receivable Turnover Ratio = Net Credit Revenue from Operation/Average Trade Receivable
3 = 3,00,000/[(x + x + 1,00,000)/2]
3 = 6,00,000/2x + 1,00,000
6x + 3,00,000 = 6,00,000
x = 3,00,000/6
Opening Trade Receivables (x) = Rs 50,000
Closing Trade Receivables = 50,000 + 1,00,000
= Rs 1,50,000
CASE 2
Opening Trade Receivables = x
Closing Trade Receivables = 3x
Trade Receivables Turnover Ratio = Net Credit Revenue from Operation/Average Trade Receivables
3 = 3,00,000/[(x + 3x)/2]
3 = 6,00,000/4x
Opening Trade Receivables (x) = Rs 50,000
Closing Trade Receivables = 50,000 x 3
= Rs 1,50,000
CASE 3
Opening Trade Receivables = x
Closing Trade Receivables = x + 3x = 4x
Trade Receivable Turnover Ratio = Net Credit Revenue from Operation/Average Trade Receivables
3 = 3,00,000/[(x + 4x)/2]
3 = 6,00,000/5x
Opening Trade Receivables (x) = Rs 40,000
Closing Trade Receivables = 4 x 40,000
= Rs 1,60,000