Question

# Calculate the amount of Opening Trade Receivables and Closing Trade Receivables from the following figures : Trade Receivables Turnover Ratio 4 times Cost of Revenue from Operations (Cost of Goods Sold) Rs. 6,40,000 Gross Profit Ratio 20% Closing Trade Receivables were Rs. 20,000 more than at the beginning. Cash Revenue from Operations being 33 13% of Credit Revenue from Operations.

Solution

## Gross Profit                            = 20% of Revenue from Operations It means if Revenue from Operations (Sales) = Rs. 100 Gross Profit = Rs. 20 & Cost of Revenue from Operations = Rs. 80 If Cost of Revenue from Operations is Rs. 80, Revenue from Operations is Rs. 100 If Cost of Revenue from Operations is Rs. 6,40,000 Revenue from Operations is 10080×Rs. 6,40,000 = Rs. 8,00,000 Total Revenue from Operations = Rs. 8,00,000 As Cash Revenue from Operations being 33 13% of Credit Revenue from Operations, The Ratio of Cash Revenue from Operations and Credit Revenue from Operations = 3313 % : 100 or 1 : 3 or 14:34 Credit Revenue from Operations = Rs. 8,00,000 ×34=Rs.6,00,000 Trade Receivable Turnover Ratio =Credit Revenue from OperationsAverage Trade Receivables 4 (Given)  = Rs. 6,00,000Average Trade Receivables Average Trade Receivables  = Rs. 6,00,0004=Rs. 1,50,000 Opening Trade Receivables  = Rs. 1,50,000 - 12 of Rs. 20,000 = Rs. 1,40,000 Closing Trade Receivables = Rs. 1,50,000 + 12 of Rs. 20,000 = Rs. 1,60,000

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