10-14-2009, 04:17 PM
The second question gives out a lot of information but it seems to ask only for the amount of creditors despite giving out itself that there would be 50% increase in the creditors. If my above understanding of the question's requirement is correct, than
The answer is Current creditors = Rs. 80,000
Add = Rs. 40,000 (50% of 80,0000)
Year End Creditors = Rs. 120,000
Or if you go the other way around i.e. assume that total purchases increased by 50 % than the answer is same as above
creditors period = year end creditors / purchases * 365 days
30 days = 80,000 /purchases * 365 days
purchases = 80,000 /30 * 365 days
973,334 = 120,000/60 days *356 days
For next year Purchases = Rs. 973,334 * 150% = Rs. 1,460,001
1,460,001 = year end /30 * 365 days
1,460,001 * 30 /365 = 120,000
The answer is Current creditors = Rs. 80,000
Add = Rs. 40,000 (50% of 80,0000)
Year End Creditors = Rs. 120,000
Or if you go the other way around i.e. assume that total purchases increased by 50 % than the answer is same as above
creditors period = year end creditors / purchases * 365 days
30 days = 80,000 /purchases * 365 days
purchases = 80,000 /30 * 365 days
973,334 = 120,000/60 days *356 days
For next year Purchases = Rs. 973,334 * 150% = Rs. 1,460,001
1,460,001 = year end /30 * 365 days
1,460,001 * 30 /365 = 120,000
