From the following information, calculate Opening and Closing Trade Receivables, if Trade Receivables Turnover Ratio is 3 Times: (i) Cash Revenue from Operations is 1/3rd of Credit Revenue from Operations. (ii) Cost of Revenue from Operations is Rs. 3,00,000. (iii) Gross Profit is 25% of the Revenue from Operations. (iv) Trade Receivables at the end are 3 Times more than that of in the beginning.

SOLUTION

Trade Receivable Turnover Ratio	Credit Revenue from Operations /Average Trade Receivables
3	3,00,000 / Average Trade Receivables
Average Trade Receivables	= 3,00,000 / 3 = Rs. 1,00,000
Average Trade Receivables	Opening Trade Receivables + Closing Trade Receivables / 2
1,00,000	= x + 4x / 2

So, x would be Rs. 40,000
∴Opening receivables would be Rs. 40,000 and, Closing Receivables would be Rs. 1,60,000(40,000 × 4)

Revenue from Operations	= 3,00,000 + 25 / 75 × 3,00,000 = Rs. 4,00,000
Credit Revenue from Operations	Total Revenue from Operations − Cash Revenue from Operations
x	= 4,00,000 – 1 / 3x
Credit Revenue from Operations	= Rs. 3,00,000