Question

Prepare statement of cash flow from the financial statement of Alfalah (Pvt) Ltd. For the year ended.
PROFIT AND LOSS STATEMENT 2017 RS.
Sales 757,645
Cost of sales (628,143)
Gross Profit 129,502
Administration expense 14,723
Other expenses 21,992
Gain on sale of fixed assets (2,000)
Depreciation expenses 23,000
57,715
Profit before income tax 71,787
Income tax expenses(current) and deferred) 23,787
Net profit after tax 48,000
STATEMENT OF RETAINED EARNINGS
Retained earnings, beginning of period 7,312
Net profit for the period 48,000
55,312
Dividend declared 33,000
Transfer to general reserve 20,000
53,000
Retained earnings, end of period 2,312
STATEMENT OF FINANCIAL POSITION
2017 2016
Cash 2,000 95,000
Trade Receivables 493,000 332,000
Inventories 325,000 259,000
Fixed assets-cost 425,000 450,000
Accumulated Depreciation (239,000) (240,000)
Capital work in process 180,000 0
Long term trade receivables 50,000 45,000
1,236,000 932,000
Additional Information:
1. During the year company bonus shares, Rs.10,000 and right shares at par, Rs.30,000.
2. Machinery costing Rs. 25,000 was scrapped and sold for Rs. 3,000. The book value of machinery was Rs. 1,000.
3. All assessed taxation liabilities have been paid.
4. Proposed dividend was declared before year ended.
Required: Statement of cash flows under direct method and indirect method.

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Answer 1

CASH FLOW STATEMENT(Indirect Method)
Cash flow from Operating Activities	$	$
Profit before Income Tax		71787
(+) Depreciation		23000
(-) Gain on sale of fixed asset		-2000
Cash Net Income		92787
Working Capital Changes :
Increase In accounts Receivable	-161000
Increase in Inventory	-66000
Income tax paid	-23787	-250787
Cash generated by operations		-158000
Cash flow from Investing Activities
Sale of Machinery	3000
Capital Working process	-180000
Cash Generated from investing activities		-177000
Cash flow from Financing Activities
Increase in long term trade receivables	5000
Dividends paid	-33000
Issue of Right shares	270000
Cash used for financing activities		242000
Net Changes in cash during the year		-93000
Opening cash balance		95000
Ending cash balance		2000

CASH FLOW STATEMENT(Direct Method)
Cash flow from Operating Activities	$	$
Cash Received from customers(332000+757645-493000)	596645
Cash paid to suppliers(259000+628143-325000)	-562143
Cash paid to employees(14723+21992)	-36715
Income Tax paid	-23787
Cash generated by operations		-158000
Cash flow from Investing Activities
Sale of Machinery	3000
Capital Working process	-180000
Cash Generated from investing activities		-177000
Cash flow from Financing Activities
Increase in long term trade receivables	5000
Dividends paid	-33000
Issue of Right shares	270000
Cash used for financing activities		242000
Net Changes in cash during the year		-93000
Opening cash balance		95000
Ending cash balance		2000