Question

The Statement of Profit and Loass of an enterprise for the year ended 31st March, 2018, stood as follows:

$$\begin{array}{ccc}\text{Particulars}& \text{Note}& \text{Amount}\\ & \text{No.}& \\ \text{I. Revenue from Operations}& & 1,38,0000\\ \text{II. Other Income}& 1& \underset{–}{1,60,000}\\ \text{III. Total Revenue}& & \underset{–}{1,5,40000}\\ \text{IV. Expenses}& & \\ \text{Purchases}& & 9,30,000\\ \text{Changes in Inventories}& & \\ \text{(Opening Inventory - Closing Inventory) (1,00,000 - 1,30,000)}& & (30,000)\\ \text{Emplyee Benefit Expenses}& & 1,15,000\\ \text{Depreciation and Amortization Expenses}& 2& 87,000\\ \text{Other Expenses}& 3& \underset{–}{3,50,000}\\ \text{Total Expenses}& & 1,45,2000\\ \text{V. Profit Before Tax (III - IV)}& 88,000& \end{array}$$
Notes:
(1)
$$\begin{array}{cc}\text{Other Income:}& \\ \text{Divident Received}& 40,000\\ \text{Profit on Sale of Building}& \\ \text{Book Value}(5,00,000)& \\ \text{Sold for}\underset{–}{6,20,000}& \underset{–}{1,20,000}\\ & \underset{–}{1,60,000}\end{array}$$
(2) $$\begin{array}{cc}\text{Depreciation and Amortization Expenses:}& \\ \text{Depreciation}& 55,000\\ \text{Goodwill written off}& \underset{–}{20,000}\\ & \underset{–}{75,000}\end{array}$$
(3) $$\begin{array}{cc}\text{Other Expenses:}& \\ \text{Office Expenses}& 31,0000\\ \text{Selling and Distribution Expenses}& 40,000\\ \text{Share Issue Expenses Written off}& \underset{–}{12,000}\\ & \underset{–}{3,62,000}\end{array}$$

Additional Information: Rs.
1. Manufacturing Wages Outstanding 50,000
2. Salaries Outstanding 40,000
3. Salaries Prepaid 5,000

Calculate the amount of cash generated from operating activites.

Answer 1

Cash Flows From Operating Activities
for the year ended 31st March, 2018
$$\begin{array}{ccc}\text{Particulars}& \text{Rs.}& \text{Rs.}\\ \text{Net Profit before Tax}& & 88,000\\ \text{Adjustments for non- cash items:}& & \\ (+)\text{Depreciation Written-off}& 55,000& \\ (+)\text{Share issue Expenses Written-off}& 12,000& \\ (+)\text{Goodwill written-off}& \underset{–}{20,000}& \underset{–}{87,000}\\ & & 1,75,000\\ \text{Adjustments for non- operating items:}& & \\ (-)\text{Dividend Received}& (40,000)& \\ (-)\text{Profit on Sale of Building}& \underset{–}{(1,20,000)}& \underset{–}{(1,60,000)}\\ \text{Operating profit before working capital Changes}& & 15,000\\ \text{Changes in Working Capital:}& & \\ (+)\text{Increase in Outstanding Wages}& 50,000& \\ (+)\text{Increase in Outstanding Salaries}& \text{40,000}& \\ (-)\text{Increase in Inventory}& (30,000)& \\ (-)\text{Increase in Prepaid Salaries}& \underset{–}{(5,000)}& \underset{–}{55,000}\\ \text{Net Cash Flow from Operating Activities}& & \underset{–}{70,000}\end{array}$$