A company makes credit revenue from operations of ₹2,40,000 during the year. The trade receivables turnover ratio is 8 times. Calculate closing debtors, if the closing debtors are more by ₹6,000 than the opening debtors.
Answer & explanation
Correct answer: option 1
The correct answer is option 1- ₹33,000.
Let Opening Debtors = X
Closing Debtors = X + 6000
Average Trade Receivable = (X+X+6,000)/2
= X+3,000
Trade Receivable Turnover ratio = Net Credit Revenue from Operations/Average Trade Receivable
8 = 2,40,000/(X+3,000)
X+3,000 = 2,40,000/8
X+3,000 = 30,000
X = 30,000 - 3000
= 27,000
Closing debtors = 27,000 + 6,000
= 33,000