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Problems and Solutions – Cash Flow Statement

PROBLEMS AND SOLUTIONS 

Problem 1. From the following profit and loss account, compute the case from operations.

Profit and Loss account for the year ended 31.3.2001

 

Solution :

Computation of cash from operation

Net profit earned during the year                                                                   74,000

Add: Non-cash and Non-operating expenses

Depreciation                                                    10,000

Loss on sale of plant                                       4,000

Goodwill written off                                      10,000

Proposed dividend                                          15,000

Provision for tax                                             12,000

51,000

1,25,000 

Less : Non-cash and Non-operating income

Profit on sale of land                                      15,000

Income tax refund                                          13,000

28,000

Cash from operation                                      97,000

 

Problem 2. Statement of financial position of Mr. Arun is given below.

The following additional information is also available :

(a)    There were no drawings.

(b)   There were no purchases or sale of either building or other fixed assets. Prepare a statement of case flow. [BBM, MBA Anna] 

Solution :

Cash Flow Statement

Workings: 1.

 Profit and Loss Account

2. Capital Account of Mr. Arun

3. Building Account

4. Other Fixed Assets Account

 

Problem 3. From the following particulars of Mrs.    Ragu, prepare cash flow statements. 

Liabilities:                                                       1.1.99                                      31.12.99

                                                                                    $                                              $         

Creditors                                                                     36,000                                     41,000

Mrs. A’s Loan                                                              ____                                        20,000

Capital                                                                     1,48,000                                     1,49,000

Bank Loan                                                                   30,000                                     25,000

                                                                                2,14,000                                      2,35,000

Assets :

Cash                                                                      4,000                                             3,600

Debtors                                                                35,000                                            38,400            

Stock                                                                    25,000                                             22,000

Land                                                                    20,000                                             30,000

Buildings                                                              50,000                                            55,000

Machinery                                                           80,000                                             86,000

                                                                           2,14,000                                           2,35,000 

During the year Mrs. Ragu had drawn $ 26,000 for personal use. The provision for depreciation against machinery as on 1.1.99 was $ 27,000 and as on 31.12.99 $ 36,000.

 Solution :                               

Cash Flow Statement

Workings 1.

 Profit and Loss Account

2. Capital Account

3. Machinery Account

4. Accumulated Depreciation Account