12th | Accounting Ratios | Question No. 101 To 105 | Ts Grewal Solution 2025-2026

Question 101:

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

Answer:

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 102:

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.

Answer:

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 103:

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?

Answer:

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

Question 104:

Mercury Ltd. 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:

(i) Trade Receivables Turnover Ratio;

(ii) Average Trade Receivables;

(iii) Trade Receivables at the end when Trade Receivables at the end are more than that in the beginning by ₹6,000.

Answer:

(i) Trade Receivables Turnover Ratio;

Formula for calculating Trade Receivables Turnover Ratio

Trade Receivables Turnover Ratio = no. of year / collection period

Trade Receivables Turnover Ratio = 360 / 36 =10 Times

(ii) Average Trade Receivables;

This formula is used for of calculating Trade Receivables Turnover Ratio = Credit revenue from operation /Average Trade Receivables

Trade Receivables Turnover Ratio= 4,00,000 /Average Trade Receivables = 10 Times

If Above formula is reversed, We can calculate Average Trade Receivables as follow;

Average Trade Receivables = 4,00,000/ 10 Times= 40,000

(iii) Trade Receivables at the end when Trade Receivables at the end are more than that in the beginning by ₹6,000.

∴ Closing Trade Receivables = x + 6,000

Average receivables = Opening Receivables +Closing Receivables/2

40,000 = x+x+6,000/2

Or, 80,000 = 2x+6,000

Or,2x = 74,000

Or,x = 37,000

∴ Opening Trade Receivables = x = ₹37,000

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

Closing Trade Receivables =37,000 + 6,000 = 43,000

Question 105:

Calculate Trade Receivables Turnover Ratio in each of the following alternative cases:
Case 1: Net Credit Sales ₹4,00,000; Average Trade Receivables ₹1,00,000.
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.

Answer:

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
Average Trade receivables= Opening TradeReceivables + Closing Trade Receivables/2

Average Trade receivables=2,00,000+600,000/2 = 4,00,000

Trade receivable turnover ratio = Net sales/ Average Trade receivables

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