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Cash sales 80000 Cash collected from debtors 150000 Bad debts during year 10000 Debtors at 1april 2008 15000 Debtors at 31 March 2009 10000?
Most Upvoted Answer
Cash sales 80000 Cash collected from debtors 150000 Bad debts during y...
Explanation of the given data:
- Cash sales: The total amount of sales that the company received in cash during the year was $80,000.
- Cash collected from debtors: The total amount of money collected from debtors during the year was $150,000.
- Bad debts during the year: The company incurred a loss of $10,000 due to bad debts during the year.
- Debtors at 1 April 2008: The amount of money owed to the company by its debtors on 1 April 2008 was $15,000.
- Debtors at 31 March 2009: The amount of money owed to the company by its debtors on 31 March 2009 was $10,000.
Calculation of Debtors Turnover Ratio:
Debtors Turnover Ratio is used to measure the efficiency of a company in collecting its outstanding debts. It is calculated as follows:
Debtors Turnover Ratio = Net Credit Sales / Average Debtors
Average Debtors = (Debtors at the beginning of the year + Debtors at the end of the year) / 2
Calculation of Net Credit Sales:
Net Credit Sales = Total Sales - Cash Sales
Net Credit Sales = $150,000 - $80,000
Net Credit Sales = $70,000
Calculation of Average Debtors:
Average Debtors = ($15,000 + $10,000) / 2
Average Debtors = $12,500
Calculation of Debtors Turnover Ratio:
Debtors Turnover Ratio = $70,000 / $12,500
Debtors Turnover Ratio = 5.6 times
Interpretation of Debtors Turnover Ratio:
The Debtors Turnover Ratio of 5.6 times indicates that the company is able to collect its outstanding debts 5.6 times in a year. It also indicates that the company is efficient in managing its debtors and collecting outstanding debts. However, the decrease in the amount of debtors at the end of the year compared to the beginning of the year may indicate that the company is taking measures to collect outstanding debts faster. The company should continue to monitor its debtors turnover ratio to ensure that it remains efficient in collecting outstanding debts.
Community Answer
Cash sales 80000 Cash collected from debtors 150000 Bad debts during y...
Cash sales + cash collected from debtors + closing debtors + opening debtors (less bad debts)
80000+150000+10000+(15000-10000)
240000-5000
235000
80000+150000+10000+(15000-10000)
240000-5000
235000
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Cash sales 80000 Cash collected from debtors 150000 Bad debts during year 10000 Debtors at 1april 2008 15000 Debtors at 31 March 2009 10000?
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Cash sales 80000 Cash collected from debtors 150000 Bad debts during year 10000 Debtors at 1april 2008 15000 Debtors at 31 March 2009 10000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Cash sales 80000 Cash collected from debtors 150000 Bad debts during year 10000 Debtors at 1april 2008 15000 Debtors at 31 March 2009 10000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Cash sales 80000 Cash collected from debtors 150000 Bad debts during year 10000 Debtors at 1april 2008 15000 Debtors at 31 March 2009 10000?.
Cash sales 80000 Cash collected from debtors 150000 Bad debts during year 10000 Debtors at 1april 2008 15000 Debtors at 31 March 2009 10000? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Cash sales 80000 Cash collected from debtors 150000 Bad debts during year 10000 Debtors at 1april 2008 15000 Debtors at 31 March 2009 10000? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Cash sales 80000 Cash collected from debtors 150000 Bad debts during year 10000 Debtors at 1april 2008 15000 Debtors at 31 March 2009 10000?.
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