Net credit sales of business was Rs. 1,75,000. Debtors Turnover ratio is 8 times. Closing debtors were in excess of opening debtors by Rs. 7,000. Opening debtors will be

The correct answer is: A. Rs. 18,375

Debtors Turnover Ratio = Net Credit Sales / Average Debtors

Average Debtors = Net Credit Sales / Debtors Turnover Ratio

Opening Debtors + Closing Debtors = 2 * Average Debtors

Opening Debtors = 2 * Average Debtors – Closing Debtors

Opening Debtors = 2 * (175000 / 8) – 7000 = 18375

Here is a brief explanation of each option:

• Option A: Rs. 18,375 is the correct answer.
• Option B: Rs. 21,875 is incorrect. This is the answer that would be obtained if the closing debtors were equal to the opening debtors. However, the question states that the closing debtors were in excess of the opening debtors by Rs. 7,000.
• Option C: Rs. 25,375 is incorrect. This is the answer that would be obtained if the closing debtors were equal to the average debtors. However, the question states that the closing debtors were in excess of the average debtors by Rs. 7,000.
• Option D: None of the above is the correct answer.