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Question

Charles Ltd. earned a profit of ₹ 1,00,000 after charging depreciation of 20,000 on assets and a transfer to General Reserve of ₹ 30,000. Goodwill amortised was ₹ 7,000, and gain on sale of machinery was ₹ 3,000. Other information available is (changes in the value of Current Assets and Current Liabilities): trade receivables showed an increase of ₹ 3,000; trade payables an increase of ₹ 6,000; Prepaid expenses an increase of ₹ 200; and outstanding expenses a decrease of ₹ 2,000.
Ascertain Cash Flow from Operating Activities.


Solution

Cash Flow Statement

 

Particulars

Amount

(₹)

Amount

(₹)

 

Cash Flow from Operating Activities

 

 

 

Profit as per Statement of Profit and Loss

 

1,00,000

 

Items to be Added:

 

 

 

Depreciation

20,000

 

 

Goodwill amortised

7,000

 

 

Transfer to General Reserve

30,000

 

 

Items to be Deducted:

 

 

 

Gain on sale of machinery

(3,000)

54,000

 

Operating Profit before Working Capital Adjustments

 

1,54,000

 

   Less: Increase in Current Assets

 

 

 

  Prepaid Expenses

(200)

 

 

  Trade Receivables

(3,000)

 

 

   Less: Decrease in Current Liabilities

 

 

 

Outstanding Expenses

(2,000)

 

 

   Add:Increase in Current Liabilities

 

 

 

    Trade Payables

6,000

800

 

Cash Generated from Operations

 

1,54,800


Accountancy
TS Grewal-II (2019)
All

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