Question

From the following information, calculate Cash Flow from Operating Activities:

Particulars	31st March, 2022 (₹)	31st March, 2021 (₹)
Surplus (i.e., Balance in the Statement for Profit and Loss)	(89,000)	(71,000)
Inventory	12,000	4,000
Trade Receivables	58,000	45,000
Outstanding Expenses	14,600	10,000
Goodwill	57,000	27,000
Cash in Hand	9,000	12,000
Machinery	82,000	56,000

1. A piece of machinery costing ₹ 50,000, on which depreciation of ₹ 20,000 had been charged, was sold for ₹ 10,000. Depreciation charged during the year was ₹ 18,000.
2. Income Tax ₹ 23,000 was paid during the year.
3. Interim Dividend paid during the year was ₹ 36,000.

Answer 1

Cash Flow Statement for the year ended 31st March 2022.
Particulars	Amount (₹)	Amount (₹)
Cash Flow from Operating Activities:
Net Profit Before Tax		41,000
Adjustments for non-cash and non-operating items:
Add:
Depreciation on Machinery	18,000
Loss on Sale of Machinery	20,000	38,000
Operating Profit before Working Capital Changes		79,000
Add: Decrease in Outstanding Expenses	4,600
Less:
Increase in Inventory	(8,000)
Increase in Trade Receivables	(13,000)	(16,400)
Cash Generated from Operations		62,600
Less: Tax Paid		(23,000)
Net Cash Flow from Operating Activities		39,600

Working Note 1: Calculation of Net Profit Before Tax & Extraordinary Item.

Particulars	Amount (₹)	Amount (₹)
Profit & Loss Balance as on 31st March (Closing Balance)		71,000
Less: Profit & Loss Balance as on 31st March (Opening)		89,000
		(18,000)
Add:
Provision for Taxation of Current Year	23,000
Interim Dividend Paid during the year	36,000	59,000
Net Profit Before Tax		41,000

Working Note 2:

Dr.	Machinery A/c		Cr.
	For the year ended 31st March 2022.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	56,000	By Bank A/c (Sale)	10,000
To Bank A/c (Purchase)	74,000	By Depreciation A/c	18,000
(Balancing figure)		By Profit & Loss A/c (Loss)	20,000
		By Balance c/d	82,000
Total	1,30,000	Total	1,30,000