InvestorQ : Opening and closing stock of SVK Ltd. is Rs.1,20,000 & Rs.1,80,000 respectively. Material consumed in income statement is shown at Rs.3,60,000. Suppliers of material extend 4 week credit. How much of creditors will be shown in preparation of working
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Opening and closing stock of SVK Ltd. is Rs.1,20,000 & Rs.1,80,000 respectively. Material consumed in income statement is shown at Rs.3,60,000. Suppliers of material extend 4 week credit. How much of creditors will be shown in preparation of working

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Karim Sahu answered.
1 year ago
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Well, I do not understand the question fully. So, we are working on assumptions here:

Here, the first thing that we need is a purchase. Considering the data given, we shall use the formula:

Purchases = Closing Stock + Consumption – Opening Stock
Putting values, you will get:
Purchases = Rs 4,20,000
Now, this is the purchase spread over the year. Assuming 52 weeks over a year, we can say, per month purchases (average) would be:
= 4,20,000/52 
= Rs 8,077

Given that the suppliers extend 4-week credit to the company, the outstanding balance of creditors at the end of the period would be equal to purchases over a four-week period.

Hence, this would be equal to:
= Rs 8,077*4
= Rs 32,308

The above amount shall form part of the work for finding out the outstanding creditors. The answer may differ in the case of different assumptions.
Note: The answer is as per my understanding of the question according to the given data, it could differ in case the user want to ask something else.
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