Question 111:
Calculate Trade Payables Turnover Ratio and Average Debt payment Period from
the following information:
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|
1st April, 2020 |
31st March,
2021 |
|
Sundry Creditors |
1,50,000 |
4,50,000 |
|
Bills Payable |
50,000 |
1,50,000 |
Total Purchases ` 21,00,000; Purchases
Return ` 1,00,000; Cash Purchases `
4,00,000.
Answer:
Average Trade Payables |
= Opening Creditors & B/P + Closing Creditors & B/P÷2 |
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|
= 1,50,000 + 50,000 + 4,50,000 + 1,50,000÷2 |
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= ` 4,00,000 |
Net Credit Purchases |
= Total Purchases - Purchases Return - Cash Purchases |
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|
= 21,00,000 - 1,00,000 - 4,00,000 = ` 16,00,000 |
Trade Payables Turnover Ratio |
= Net Credit Purchases / Average Trade Payables= 16,00,000/4,00,000 = 4 times |
Average Debt Payment Period |
= 12 Trade Payable Turnover Ratio |
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|
= 12/4= 3 months |
Question 112:
Calculate Trade payables Turnover Ratio from the following information:
Opening Creditors ` 1,25,000; Opening
Bills Payable ` 10,000; Closing
Creditors ` 90,000; Closing
bills Payable ` 5,000;
Purchases ` 9,50,000; Cash
Purchases ` 1,00,000; Purchases
Return ` 45,000.
Answer:
Net Credit Purchases = Purchases – Cash Purchases – Purchase
Return
= ` 9,50,000 – `
1,00,000 – ` 45,000 = `
8,05,000
Average Trade Payables |
= Opening Creditors & Bills payables + Closing Creditors & Bills payables / 2 |
|
|
= 1,25,000 + 10,000 + 90,000 +5,000/2 |
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|
= ` 1,15,000 |
Trade Payables turnover ratio |
= 8,05,000/115000 |
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= 7 Times |
Question 113:
Calculate Trade Payables Turnover Ratio for the year 2022-23 in each of the
alternative cases:
Case 1 : Closing Trade Payables ` 45,000; Net
Purchases ` 3,60,000; Purchases
Return ` 60,000; Cash
Purchases ` 90,000.
Case 2 : Opening Trade Payables ` 15,000; Closing
Trade Payables ` 45,000; Net
Purchases ` 3,60,000.
Case 3 : Closing Trade Payables ` 45,000; Net
Purchases ` 3,60,000.
Case 4 : Closing Trade Payables (including
` 25,000
due to a supplier of machinery) ` 55,000; Net Credit
Purchases ` 3,60,000.
Answer:
Case 1
Net Credit Purchases = Net Purchases − Cash Purchases
= 3,60,000 − 90,000
= 2,70,000
Trade Payables Turnover Ratio = Net Credit Purchases/Closing Trade Payables
= 2,70,000/45,000
= 6 times
Case 2
Net Purchases = 3,60,000
Average Trade Payables = Opening Trade Payables + Closing Trade Payables/2
= 15,000 + 45,000/2 = 30,000
Trade Payables Turnover Ratio = Net Credit Purchases/Average Trade Payables
= 3,60,000/30,000 = 12 times
Case 3
Trade Payable Turnover Ratio = Net Credit Purchases/Closing Trade Payables
= 3,60,000/45,000
= 8 times
Case 4
Net Credit Payables for Goods = Trade Payables − Creditors for Machinery
= 55,000 − 25,000
= 30,000
Trade Payables Turnover Ratio = Net Credit Purchases/Average Trade Payables
= 3,60,000/30,000
= 12 times
Question 114:
Closing Trade Payables `5,40,000, Net purchases `43,20,000, Cash purchases `10,80,000. Calculate Trade Payables Turnover Ratio
Answers;
Trade payable turnover ratio= credit purchases/ average trade payable
Trade payable turnover ratio =32,40,000 / 5,40,000= 6 Times
Credit purchases= net purchases - cash purchases
32,40,000 = 43,20,000- 10,80,000
Calculation Opening and Closing trade payable
Question 115:
From the following information, calculate Opening and Closing trade payable:
Cash purchases 25% of total Purchases, Revenue from operation `3,00,000, Gross
profit 25% on revenue from Operations, Opening Inventory ` 75,00,000, Closing Inventory `150,000, Trade
Payables turnover Ratio 3 times, Closing Trade Payables were `75,000 in excess of
opening trade payables
Answers;
1 |
Cost of revenue from operation |
= revenue from operation - gross profit |
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|
=3,00,000 -( 25% of revenue from operations) = 3,00,000 -( 25% of 3,00,000) = 3,00,000 - 75,000 |
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Cost of revenue from operation |
=2,25,000 |
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|
|
|
|
2. |
Total purchases
Total purchases |
= cost of revenue + closing inventory - opening inventory = 25,000 + 15,0000 - 75,000 = 3,00,000 |
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|
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3. |
Net credit purchases |
= total purchases - Cash purchases = 3,00,000 - 25% of 3,00,000 3,00,000 - 75,000 |
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Net credit purchases |
= 2,25,000 |
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|
|
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4. |
Trade payable turnover ratio 3 3x + 3 X + 2,25,000 6x + 2,25,000 6x = X = X= Closing trade payables = |
= net credit purchases / average trade payable = 225,000/ X + X + 7500/2 = 4,50,000 = 4,50,000 4,50,000 -2,25,000 2,25,000/6 37,500 (Opening trade payable) 37,500 + 75,000= 1,12,500 |
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I
Chapter 3 – Accounting Ratio