Question

Cash Revenue from Operations (Cash Sales) ₹ 2,00,000, Cost of Revenue from Operations or Cost of Goods Solds ₹ 3,50,000; Gross Profit ₹ 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 ₹ 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.

Answer 1

Total Sales = Cost of Goods Sold + Gross Profit

= 3,50,000 + 1,50,000 = 5,00,000

Credit Sales = Total Sales − Cash Sales

= 5,00,000 − 2,00,000 = 3,00,000

Case 1:

Let Opening Trade Receivables = x

Closing Trade Receivables = x + 1,00,000

Opening Trade Receivables = x = RS 50,000

Closing Trade Receivables = x + 1,00,000 = 50,000 + 1,00,000 = Rs 1,50,000

Case 2:

Let Opening Trade Receivables = x

Closing Trade Receivables = 3 x

Opening Trade Receivables = x = Rs 50,000

Closing Trade Receivables = 3x = 3 × 50,000 = Rs 1,50,000

Case 3:

Let Opening Trade Receivables = x

Closing Trade Receivables = x + 3 x = 4x

Opening Trade Receivables = x = Rs 40,000

Closing Trade Receivables = 4 x = 4 × 40,000 = Rs 1,60,000