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Question

The following is the Profit and Loss Account of Yamuna Limited:

Statement of Profit and Loss of Yamuna Ltd.

for the Year ended March 31, 2017

Particulars

Note No.

Amount

(Rs)

i)

Revenue from Operations

10,00,000

ii)

Expenses

Cost of Material Consumed

1

50,000

Purchase of Stock-in-trade

5,00,000

Other Expenses

2

3,00,000

Total Expenses

8,50,000

iii)

Profit before Tax (I – ii)

1,50,000

Additional information:

(i) Trade receivables decrease by Rs 30,000 during the year.

(ii) Prepaid expenses increase by Rs 5,000 during the year.

(iii) Trade creditors decrease by Rs 15,000 during the year.

(iv) Outstanding expenses payable increased by Rs 3,000 during the year.

(v) Operating expenses included depreciation of Rs 25,000.

Compute net cash provided by operations for the year ended March 31, 2017 by the indirect method.

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Solution

Cash Flow from Operating Activities of Yamuna Limited as on March 31, 2017

Particulars

Amount

Rs

Amount

Rs

Net Profit earned during the year

1,50,000

Items to be added:

Depreciation

25,000

Operating Profit before Working Capital changes

1,75,000

Add:

Increase in Current Liabilities

Outstanding Expenses

3,000

Add:

Decrease in Current Assets

Trade Receivables

30,000

Stock

50,000

83,000

Less:

Decrease in Current Liabilities

Trade Creditors

(15,000)

Less:

Increase in Current Assets

Prepaid Expenses

(5,000)

(20,000)

Net Cash from Operations

2,38,000

Note: As per the solution, the Net Cash from Operating Activities is Rs 2,38,000, however, as per the answer given in the book is Rs 2,18,000.


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