Cash Flows from Operating Activities using direct method
Working Notes
(a) Effect of sales on cash can be computed as follows:
Particulars |
Rs |
Rs. |
Cash Sales |
|
14,00,000 |
Net credit sales |
56,00,000 |
|
Less: Closing balance of debtors and bills receivable |
9,00,000 |
|
Add: Opening balance of debtors and bills receivable |
8,00,000 |
|
Cash generated from credit sales |
|
55,00,000 |
Total cash generated from sales |
|
69,00,000 |
(b) Cash movement due to purchases can be ascertained as follows:
Particulars |
Rs |
Cash purchases |
10,00,000 |
Credit purchases |
52,00,000 |
Total Purchases |
62,00,000 |
Add: Opening balance of creditors and bills payable |
15,00,000 |
Less: Closing balance of creditors and bills payable |
3,00,000 |
Cash Payment for Purchases |
74,00,000 |
(c) Disbursement of cash for expenses can be calculated as follows:
Particulars |
Office and administrative expenses (Rs.) |
Income Tax (Rs.) |
Expenses |
4,40,000 |
80,000 |
Add: Outstanding at the beginning of the year |
90,000 |
1,00,000 |
Less: Outstanding at the end of the year |
30,000 |
1,20,000 |
Add: Prepaid Expenses at the end of the year |
1,30,000 |
|
Less: Prepaid Expenses at the beginning of the year |
50,000 |
|
Cash Payment for Expenses |
5,80,000 |
60,000 |