Explanation:

Total credit revenue from operations of a firm is Rs 5,40,000. Average collection period is 3 months. Opening debtors are Rs 1,10,000

average collection period =               12 months                   = 3 months

                                             trade receivable turnover ratio 

trade receivable turnover ratio  = 12 months   = 4 times

                                                      3 months

trade receivable turnover ratio = credit revenue from operations  = 6 times

                                                       average trade receivables

     average trade receivables    = Rs. 5,40,000  = Rs.1,35,000

                                                              4

Let closing debtors = X

opening debtors = Rs. 1,10,000

 average trade receivables = opening debtors + closing debtors

                                                                          2

                                             =  Rs. 1,10,000 + X  = Rs.1,35,000

                                                                2

                                             = Rs. 1,10,000 + X= Rs. 1,35,000 * 2

                                             = Rs. 1,10,000 + X= Rs. 2,70,000

                                        X  = Rs. 2,70,000 - Rs. 1,10,000

                   closing debtors = Rs.1,60,000 

          CLOSING DEBTORS = Rs. 1,57,500