Question

Calculate Cash Flow from Operating Activities from the following information:
INCOME STATEMENT (STATEMENT OF PROFIT AND LOSS)for the year ended 31st March, 2019

Particulars	Note No.	(₹)
I. Revenue from Operations (Sales)		5,98,000
II. Other Income	1	19,500
III. Total Revnue (I + II)		6,17,500
IV. Expenses :
Cost of Materials Consumed		4,00,000
Change in Inventories of Finished Goods and Work-in-Progress	2	15,000
Employee Benefit Expenses		1,05,000
Depreciation and Amortisation Expenses		15,000
Other Expenses	3	20,000
Total Expenses		5,55,000
V. Profit before Tax (III − IV)		62,500
VI. Tax @ 30%		18,750
VII. Profit after Tax (V − VI)		43,750

Notes to Accounts

Particulars	₹
1. Other Income
Rent	15,000
Gain (Profit) on Sale of Machinery	2,500
Interest on Debentures held as Investments	2,000
	19,500
Changes in Inventories of Finished Goods and Work-in-Progress
(a) Finished Goods
Opening Inventories	37,500
Less: Closing Inventories	25,000
Sub-Total	12,500
(b) Work-in-Progress
Opening Inventories	22,500
Less: Closing Inventories	20,000
Sub-Total	2,500
Total (a + b)	15,000
2. Other Expenses
Office Expenses	12,500
Selling Expenses	6,000
Loss on Sale of Furniture	1,500
	20,000

 

Current Assets and Current Liabilities	As on 31st March, 2019 (₹)	As on 1st April, 2018 (₹)
Trade Receivables	25,000	20,000
Trade Payables	32,500	35,000
Outstanding Expenses	8,000	5,000
Prepaid Expenses	5,000	3,500

Answer 1

		Cash Flow Statement  for the year ended March 31, 2019
	Particulars		Amount (₹)	Amount (₹)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss			43,750
	Add: Provision for Tax			18,750
	Profit Before Taxation			62,500
	Items to be Added:
	Depreciation and Amortization Expenses		15,000
	Loss on Sale of Furniture		1,500
	Items to be Deducted:
	Profit on Sale of Machinery		(2,500)
	Rent		(15,000)
	Interest on Investment		(2,000)	(3,000)
	Operating Profit before Working Capital Adjustments			59,500
	Less: Increase in Current Assets
	Trade Receivables		(5,000)
	Prepaid Expenses		(1,500)
	Less: Decrease in Current Liabilities
	Trade Payables		(2,500)
	Add: Increase in Current Liabilities
	Outstanding Expenses		3,000
	Add: Decrease in Current Assets
	Inventory (Finished goods ₹ 12,500 + Work-in-Progress ₹ 2,500)		15,000	9,000
	Cash Generated from Operations			68,500
	Less: Tax Paid			(18,750)
	Net Cash Flows from Operating Activities			49,750