# 12th | Ts grewal 2021-2022 Question 91 to 95 | ch:4 Accounting Ratios

#### Question 91:

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

Closing Trade Receivables =  ` 1,20,000
Revenue from Operations =
` 14,40,000
Since, opening trade receivables have not been given we assume closing trade receivables to be our average trade receivables. Also, the revenue from operations will be assumed to be revenue from net credit sales.
Trade Receivables Turnover Ratio = Credit Revenue from Operations/Average Credit receivables
= 14,40,000/1,20,000 = 12 times
Therefore, this higher ratio indicates the rate at which the firm is able to collect its debt efficiently.

#### Question 92:

Closing Trade Receivables  ` 4,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables  ` 2,00,000; Revenue from Operations, i.e., Revenue from Operations, i.e., Net Sales  ` 15,00,000. Calculate Trade Receivables Turnover Ratio.

 Let Credit Sales be = x Cash Sales =25% of Credit Sale Cash Sales =x×25/100 =25x/100 Total Sales = Cash Sales + Credit Sales 15,00,000 =25x/100+x Or, 125x/100 =15,00,000 Or, x =15,00,000×100/125=12,00,000 Opening Trade Receivables = Closing Trade Receivables − 2,00,000 = 4,00,000 − 2,00,000 = 2,00,000 Average receivables = Opening Receivables +Closing Receivables/2 Average receivables = 2,00,000+4,00,000/2=3,00,000 Trade Receivables Turnover Ratio =Net Credit Sales/Average Trade Receivables  =12,00,000/3,00,000 =4

Therefore, Trades Receivable Turnover Ratio is 4 Times

#### Question 93:

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

 Debt collection period =12 Month/ Debtors turnover ratio 2 =12/ Debtors turnover ratio Debtors turnover ratio=6 Debtors turnover ratio = Credit sales / Debtors (Closing ) 6 =7,20,000/ Debtors (Closing ) Debtors (Closing ) =1,20,000

#### Question 94:

A limited company made Credit Sales of  ` 4,00,000 during the financial period. If the collection period is 36 days and year is assumed to be 360 days, calculate:
(iii) Trade Receivables at the end when Trade Receivables at the end are more than that in the beginning by
` 6,000.

 (i) Debt collection period =360/ trade receivable turnover ratio 36 =360/ Debtors turnover ratio trade receivable turnover ratio = 10 Times (ii) trade receivable turnover ratio = Net Credit sales / Average trade receivable 10 =4,00,000/ Average trade receivable Average trade receivable = 4,00,000/10=40,000

#### ∴ Closing Trade Receivables = x + 6,000

Average receivables

= Opening Receivables +Closing Receivables/2

#### =37,000

Opening Trade Receivables = x =  ` 37,000

Closing Trade Receivables = x + 6,000 = 43,000

#### Question 95:

Calculate Trade Receivables Turnover Ratio in each of the following alternative cases:
Case 1: Net Credit Sales
Case 2: Revenue from Operations (Net Sales)
`30,00,000; Cash Revenue from Operations, i.e., Cash Sales  `6,00,000; Opening Trade Receivables  `2,00,000; Closing Trade Receivables  `6,00,000.
Case 3: Cost of Revenue from Operations or Cost of Goods Sold
`3,00,000; Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening Trade Receivables  `50,000; Closing Trade Receivables  `1,00,000.
Case 4: Cost of Revenue from Operations or Cost of Goods Sold
`4,50,000; Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables  `90,000; Closing Trade Receivables  `60,000.

Case 1

Trade receivable turnover ratio = Net sales/ Debtors+Bills receivable

Trade receivable turnover ratio = 4,00,000/1,00,000 = 4 Times

Case 2

Net Credit Sales = Total Sales −Cash Sales = 30,00,000 - 6,00,000 = 24,00,000

Trade receivable turnover ratio = 24,00,000/4,00,000 = 6 Times

Case 3

Cost of Goods Sold = 3,00,000

Gross Profit = 25% on Cost

Gross Profit = 25/100×3,00,000=75,000

Total Sales = Cost of Goods Sold + Gross Profit

= 3,00,000 + 75,000 = 3,75,000

Cash Sales = 20% of Total Sales

Cash sales =3,75,000×20/100=75,000

Credit Sales = Total Sales − Cash Sales

= 3,75,000 − 75,000 = 3,00,000

Trade receivable turnover ratio= Net sales/ Average receivables

Trade receivable turnover ratio= 3,00,000/75,000= 4 Times

Case 4

Let Sales be = x

Gross profit=x×20/100=20x/100

Sales = Cost of goods sold+Gross profit

Or. X =4,50,000+20x/100

Or, x-20/100=4,50,000

Or, x=4,50,000×100/80=5,62,500

Sales = x = 5,62,500

Let Credit Sales be = a

Cash Sales = a×25/100=25a/100

Sales =Cash Sales +Credit Sales

Or, 5,62,500=25a/100+a

Or, 5,62,500=125a/100

Or, a=5,62,500×100/125=4,50,000

Credit Sales= a = 4,50,000