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Question
Credit Revenue from Operations ₹ 3,00,000. Trade Receivables Turnover Ratio 5; Calculate Closing Debtors if Closing Debtors are two times in comparison to Opening Debtors.
Options
₹ 40,000
₹ 60,000
₹ 80,000
₹ 1,20,000
MCQ
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Solution
₹ 80,000
Explanation:
Trade Receivables Turnover Ratio = `"Credit Revenue from Operations"/"Average Trade Receivable"`
5 = `(3,00,000)/("Average Trade Receivable")`
Average Trade Receivable = `(3,00,000)/5`
= ₹ 60,000
Let the Opening Debtors be x.
Closing Debtors = `2 xx x` = `2x`
Average Trade Receivable = `("Opening Debtors" + "Closing Debtors")/2`
60,000 = `(x + 2x)/2`
60,000 × 2 = `x + 2x`
1,20,000 = `3x`
`x` = `(1,20,000)/3`
Opening Debtors `(x)` = ₹ 40,000
Closing Debtors = 2 × Opening Debtors
= 2 × 40,000
= ₹ 80,000
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