The following information is available from the books of Exclusive Ltd. for the year ended 31st...

The following information is available from the books of Exclusive Ltd. for the year ended 31st March 2016: (a) Cash sales for the year were Rs.10,00,000 and sales on account Rs.12,00,000. (b) Payments on accounts payable for inventory totaled Rs.7,80,000. (c) Collection against accounts receivable were Rs.7,60,000. (d) Rent paid in cash Rs.2,20,000, outstanding rent being Rs.20,000. (e) 4,00,000 Equity shares of Rs.10 par value were issued for Rs.48,00,000. (f) Equipment was purchased for cash Rs.16,80,000. (g) Dividend amounting to Rs.10,00,000 was declared, but yet to be paid. (h) Rs.4,00,000 of dividends declared in the previous year were paid. (i) An equipment having a book value of Rs.1,60,000 was sold for Rs.2,40,000. (j) The cash account was increased by Rs.37,20,000. Prepare a cash flow statement using direct method.

Expert Solution

In the books of Exclusive Limited: Calculation of Net Cash Flow from Direct Method:

Particulars		Amount
Cash Flow from Operating Activities
Cash Inflow
Cash Sales for the year	10,00,000
Collection against Accounts Receivable	7,60,000

Cash outflow
Payments on accounts payable	-7,80,000
Rent Paid in cash	-2,20,000	7,60,000

Cash Flow from Investing Activities
Cash Inflow
Assets sold for Cash	2,40,000
Cash outflow
Equipement Purchased	-16,80,000	-14,40,000

Cash Flow from Financing Activities
Cash Inflow
Issue of shares including premium	48,00,000
Cash outflow
Dividend Paid	-4,00,000	44,00,000

Net cashflow		37,20,000

Notes for Understanding & Workings:
1. On Account Sales were ignored since it is not related to cash
2. Oustanding Rent is not related to cash hence ignored.
3. Dividend declared is not considerable while using direct method since there is no cash flow. Hence Ignored
4. Assets sale value is considered because it is linked with cash inflow.
5. Given cash increament of 37,20,000 is matching with the our Net cash flow

Note for Student:
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