Question

The following is the profit and loss account of Yamuna Limited. Yamuna Limited Profit and Loss Account for the year ended March 31, 2007
$\begin{array}{ccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Amt. (Rs.)}\\ \text{Sales}& & 10,00,000\\ \text{Cost of Goods Sold}& & \\ \text{Opening Stock}& 2,50,000& \\ \text{Purchase}& \underset{–}{5,00,000}& \\ & 7,50,000& \\ \text{(-)Closing Stock}& \underset{–}{2,00,000}& \underset{–}{5,50,000}\\ \text{Gross Profit}& & 4,50,000\\ \text{Operating Expenses}& & \underset{–}{3,00,000}\\ \text{Net Profit}& & \underset{–}{1,50,000}\end{array}$

Additional Informations:
(i) Trade debtors 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 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, 2007 by the indirect method.

Answer 1

Cash Flow from Operating Activities of Yamuna Limited
as on March 31, 2007
$\begin{array}{ccc}\text{Particulars}& \text{Amt. (Rs.)}& \text{Amt. (Rs.)}\\ \text{Net Profit Earned During the year}& & 1,50,000\\ \text{Adjustment for non-cash items:}& & \\ \text{Depreciation}& & \underset{–}{25,000}\\ \text{Operating Profit before Working Capital Changes}& & 1,75,000\\ \text{Changes in Working Capital:}& & \\ \text{(+) Increase in Outstanding Expenses}& 3,000& \\ \text{(+) Deceases in Trade Debtors}& 30,000& \\ \text{(+) Deceases in Stock}& \text{50,000}& \\ \text{(-) Decease in Trade Creditors}& (15,000)& \\ \text{(-) Increase in Prepaid Expenses}& \underset{–}{(5,000)}& \underset{–}{63,000}\\ \text{Net Cash from Operations}& & \underset{–}{2,38,000}\end{array}$