Question

In: Accounting

URGENT Following are Balance Sheet of a Limited Co. as on 31st Dec.2013 and 2014. (15...

URGENT
Following are Balance Sheet of a Limited Co. as on 31st Dec.2013 and 2014.

Balance Sheet

Liabilities 2013 2014 Assets 2013 2014

Share Capital 61,000 74,000 Plant 45,000 43,000

Reserves 13,000 15,500 Building 50,950 48,000

Creditors 28,000 24,000 Stock 20,500 18,800

Bank O/D 18,000 0 Debtors 20,000 16,200

Prov for Tax 8,000 8,500 Cash 150 180

Profit & Loss 8,600 8,800 Bank 0 2,100

Goodwill 0 2,520

1,36,600 1,30,800 1,36,600 1,30,800

Considering the following information, calculate funds from operations, investment and

financial activities and prepare cashflow statement: -

1) Dividend proposed for Rs. 4,000.2) Provision of Rs.9,000 was made for Income Tax.

3) Rs. 2000 was written off as depreciation on Plant and Rs.2,950 on Building.

4) Profit on Sale of plant Rs. 1,500. Cost of Plant sold was 6000.

Expert Solution

1) Proposed dividend is a non Cash activity and therefore will not be shown in the cash flow statement as the dividend is only Proposed and not yet paid . Dividend paid will be considered in cash flow statement and not dividend proposed.

2)

Provision for income tax is a non Cash item but is added to the debit side of profit and loss account and therefore provision for income tax will be added back to the adjustment entry in the cash flow statement under operating activities in the net income. Therefore it will be added to the operatinc activities.

3) Depreciation is a non cash item but it is already debited in the profit and loss account because of which the net income in the cash flow statement is understated therefore the amount will be added back to the net income under operating activities.

4)

Sale amount of plant = 6,000 + 1,500 = 7,500

This amount will Be added to the investing activities as it a cash inflow transaction which will increase the cash balance. Also the gain from selling of plant will be reduced from the Operating activities as the adjustment entry.

Therefore total Investing activities = 7,500

Operating activities = 9,000 + 2,000 + 2,950 - 1,500

= $12,450

ekkarill92 answered 1 year ago

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