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+3 votes
223k views
in Accounts by (46.2k points)
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Arthur Ltd. reported a profit of Rs. 90,000 for the year ended March 31, 2012 after considering the following :

(a) Tax provided during the year — Rs 3,000 

(b) Amortization of goodwill — Rs 12,000 

(c) Profit on sale of land — Rs 5,000 

(d) Writing off preliminary expenses — Rs 2,000 

(e) Machinery costing Rs 40.000 (accumulated depreciation thereon being Rs 18.000) was sold during the year at a loss of Rs 17,000.

Extracts of its Balance Sheets at the beginning and at the end of the year are given below :

You are required to calculate Cash from Operating Activities as per Accounting Standard-3. (Show your working clearly)

2 Answers

+1 vote
by (15.0k points)
selected by
 
Best answer

Cash Flow Statement

Particulars Amount (₹) Amount (₹)

Cash flow from operating activities

(A) Net profit as per Statement of profit and loss

 Add: Proposed dividend

Provision of Tax

10000

3000

90,000

13000

Net profit before tax and extraordinary items

Add:

Depreciation on plant and machinery

Goodwill amortised

Loss on sale of machinery

14000

12000

17000

103000

43000

 

146000

Less: Profit on sale of Land

(5000)

Operating Profit Before Working Capital Changes

Add:

Stock

Expenses payable

3000

1000

141000

4000

 

145000

Less:

Accounts receivable

Accounts payable

4000

2000

6000

 

139000

Less: Tax paid

5000

Cash flow from operating activities

134000

Working notes:

Plant and Machinery A/c

Dr. Cr.

Particulars

Amount (₹)

Particulars

Amount (₹)

To Balance B/d

1,30,000

By bank a/c (Sale)

By P&L a/c (Loss)

By Depreciation a/c

By Balance C/d

5,000

17,000

14,000

94,000

1,30,000

1,30,000

Provision for Tax A/c

Dr. Cr.

Particulars

Amount (₹)

Particulars

Amount (₹)

To Bank a/c

(Tax Paid)

To Balance C/d

5,000

4,000

By Balance B/d

By P&L a/c (Loss)

6,000

3,000

9,000

9,000

+3 votes
by (49.5k points)

PROVISION FOR TAXATION ACCOUNT

by (10 points)
In plant account
How The (by bank sales) fig. Rs. 5000 was come ?
by (15.8k points)
Land sales Rs. 5000. Payment by Cheque. So, Rs. 5000 in plant account in credit sides denoted by bank sales.
by (10 points)
Why the short term investments are ignored in working capital changes ?
by (52.8k points)
Short-term investments a company intends to sell within one year. Accounts receivable, minus any allowances for accounts that are unlikely to be paid.

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