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Question
From the following particulars, determine the Opening Trade Receivables:
| Credit Revenue from Operations (Credit Sales) | ₹ 4,32,000 |
| Trade Receivables turnover Ratio | 12 Times |
| Closing Trade Receivables | ₹ 40,000 |
Numerical
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Solution
Trade Receivables Turnover Ratio = `"Credit Revenue from Operations"/"Average Trade Receivables"`
12 = `(₹ 4,32,000)/"Average Trade Receivables"`
Average Trade Receivables = `(₹ 4,32,000)/12`
= ₹ 36,000
Average Trade Receivables = `("Opening Trade Receivables" + "Closing Trade Receivables")/2`
₹ 36,000 = `("Opening Trade Receivables" + ₹ 40,000)/2`
₹ 36,000 × 2 = Opening Trade Receivables + ₹ 40,000
₹ 72,000 = Opening Trade Receivables + ₹ 40,000
Opening Trade Receivables = ₹ 72,000 − ₹ 40,000
= ₹ 32,000
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