Question

Madhuri Ltd. gives you the following information for the year ended 31st March 2016: (a) Sales for the year totaled Rs.96,00,000. The company sells goods for cash only. (b) Cost of goods sold was 60% of sales. (c) Closing inventory was higher than opening inventory by Rs.43,000. (d) Trade creditors on 31st March 2016 exceeded those on 31st March 2015 by Rs.23,000. (e) Tax paid amounted to Rs.7,00,000. (f) Depreciation on fixed assets for the year was Rs.3,15,000 whereas other expenses totaled Rs.21,45,000. Outstanding expenses on 31st March 2015 and 31st March 2016 totaled Rs.82,000 and Rs.91,000 respectively. (g) New machinery and furniture costing Rs.10,27,500 in all were purchased. (h) A rights issue was made of 50,000 equity shares of Rs.10 each at a premium of Rs.3 per share. The entire money was received with applications. (i) Dividends totaling Rs. 4,00,000 were distributed among shareholders. (j) Cash in hand and at bank as of 31st March 2015 totaled Rs.2,13,800. You are required to prepare a cash flow statement using direct method.

Answer 1

Cash Flow Statement (Under Direct Method)

Particulars	Working Note No.	Amount
A. CASH FLOWS FROM OPERATING ACTIVITIES
Cash Receiplts from Customers	1	96,00,000
Less: Cash Paid to Suppliers	2	(79,16,000)
Cash generated from Operations		16,84,000
Income Tax Paid		(7,00,000)
Net Cash flow from Operating Activities		9,84,000
B. CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of machinery and furniture		(13,42,500)
Net Cash used in investing activities		(13,42,500)
C. CASH FLOWS FROM FINANCING ACTIVITIES
Issue of Shares (50,000 @13)		650,000
Dividend Paid		(4,00,000)
Net Cash Flow from financing activities		150,000
Net Decrease in Casha dn cash equivalents (A + B + C)		(208500)
Cash and Cash Equivalents in the begining		213,800
Cash and Cash Equivalents at the end		5300

Working Note:

1) Cash Receipts from Customers

Sales = 96,00,000

2) Cash Paid to Suppliers

Cost of goods sold = 57,60,000

Add: Operating Expenses =  21,45,000

Add: Outstanding Expenses at begining = 82000

Add: Closing inventory exceeded = 43,000

Less: Outstanding Expenses at the end = (91,000)

Less: Trade Creditors exceeded = (23,000)

Cash Paid to suppliers = 79,16,000

3) Machinery and Furniture = 10,27,500

Add: Depreciation = 315,000

Purchase of machinery and furniture= 13,42,500