Question

On March 31^st, 2024 Shiva Ltd. indicated a profit of ₹ 1,27,000, after considering the following:

Particulars	₹
Depreciation on buildings	25,000
Depreciation on plant and machinery	45,000
Amortization of goodwill	20,000
Gain on sale of machinery	12,000

Additional Information:

Particulars	31.3.2024 ₹	31.3.2023 ₹
Trade Receivables	45,000	35,000
Inventory on Hand	69,000	75,000
Cash in Hand	30,000	18,000
Trade Payables	32,000	30,000
Expenses payable	5,000	10,000
Bank overdraft	35,000	60,000

Ascertain the net cash (cash flow) from operating activities.

Hints:

1. There will be no entry of Cash in Hand.
2. Decrease in Bank Overdraft will be recorded under ‘Financing Activities’.

Answer 1

Cash flow from operating activities for the year ending 31st March, 2024.
Particulars	Amount (₹)	Amount (₹)
Net Profit for the year		1,27,000
Adjustments for non-cash and non-operating items:
Add:
Depreciation on buildings	25,000
Depreciation on plant and machinery	45,000
Amortization of goodwill	20,000	90,000
		2,17,000
Less: Non-Operating Income:
Gain on sale of machinery		(12,000)
Adjusted Operating Profit		2,05,000
Changes in Working Capital:
Less:
Increase in Trade Receivables (₹ 45,000 – ₹ 35,000)	(10,000)
Decrease in Expenses Payable (₹ 5,000 – ₹ 10,000)	(5,000)
Add:
Decrease in Inventory (₹ 69,000 – ₹ 75,000)	6,000
Increase in Trade Payables (₹ 32,000 – ₹ 30,000)	2,000
Net Change in Working Capital		(7,000)
Net Cash from operating activities		1,98,000