12th | Cash Flow Statement | Question No. 17 To 20 | Ts Grewal Solution 2023-2024

Question 17:

Grand Hospitality Ltd., reported Net Profit after Tax of ` 6,40,000 for the year ended 31st March, 2023. The relevant extract from Balance Sheet as at 31st March, 2023 is:


Particulars	31st March, 2023 (`)	31st March, 2022 (`)
Inventories	1,15,000	1,25,000
Trade Receivables	1,50,000	1,10,000
Prepaid Expenses	20,000	6,000
Trade Payables	1,10,000	80,000
Provision for Tax	20,000	15,000

Depreciation charged on Plant and Machinery ` 55,000, insurance claim received ` 50,000, gain (profit) on sale of investment ` 20,000 appeared in the Statement of Profit and Loss for the year ended 31st March, 2023. Calculate Cash Flow from Operating Activities.

Answer:

Cash Flow from Operating Activities
	Particulars		(`)	(`)
	Profit as per Statement of Profit and Loss			6,40,000
	Add: Provision for Tax			20,000
	Less: Extraordinary Item
	Insurance Claim			(50,000)
	Profit Before Tax and Extraordinary items			6,10,000
	Items to be Added:
	Depreciation on Plant and Machinery			55,000
				6,65,000
	Items to be Deducted:
	Gain on Sale of Investments			(20,000)
	Operating Profit before Working Capital Adjustments			6,45,000
	Add: Increase in Current Liabilities
		Trade Payables	30,000
	Add: Decrease in Current Assets
		Inventories	10,000	40,000
	Less: Increase in Current Assets			6,85,000
		Trade Receivables	(40,000)
		Prepaid Expenses	(14,000)	(54,000)
	Cash Generated from Operations (before tax and Extraordinary items)			6,31,000
	Less: Tax Paid			(15,000)
	Cash Flow from Operating Activities after Tax			6,16,000
	Add: Extraordinary items
	Insurance Claim			50,000
	Net Cash Flows from Operating Activities			6,66,000

Question 18:

Compute Cash Flow from Operating Activities from the following:
(i) Profit for the year ended 31st March, 2023 is ` 10,000 after providing for depreciation of ` 2,000.
(ii) Current Assets and Current Liabilities of the business for the year ended 31st March, 2022 and 2023 are as follows:

Particular	31^st March 2022 (`)	31^st March 2023 (`)
Trade Receivables	14,000	15,000
Provision for Doubtful Debts	1,000	1,200
Trade Payables	13,000	15,000
Inventories	5,000	8,000
Other Current Assets	10,000	12,000
Expenses Payables	1,000	1,500
Prepaid Expenses	2,000	1,000
Accrued Income	3,000	4,000
Income Received in Advance	2,000	1,000

Answer:

Cash Flow Statement
	Particulars	(`)	(`)
	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss		10,000
	Items to be Added:
	Depreciation	2,000	2,000
	Operating Profit before Working Capital Adjustments		12,000
	Less: Increase in Current Assets
	Accrued Income	(1,000)
	Inventories	(3,000)
	Other Current Assets	(2,000)
	Trade Receivables	(1,000)
	Less: Decrease in Current Liabilities
	Income Received in Advance	(1,000)
	Add: Increase in Current Liabilities
	Expenses Payable	500
	Provision for Doubtful Debts	200
	Trade Payables	2,000
	Add: Decrease in Current Assets
	Prepaid Expenses	1,000	(4,300)
	Cash Generated from Operations		7,700

Question 19:

Calculate Cash Flow from Operating Activities from the following information.

Particular	(`)
Net Profit (Difference between Closing and Opening Balance of Surplus, i.e., Balance in Statement of Profit and Loss)	8,00,000
Final Dividend paid in the year	1,10,000
Compensation for Natural Disaster credited to Statement of Profit and Loss	75,000
Depreciation	1,50,000
Loss on Sale of Investment	30,000
Gain (Profit) on Sale of Land	90,000
Provision for Tax	1,10,000
Dividend Received	20,000
Decrease in Current Assets (Other than Cash and Cash Equivalents)	40,000
Increase in Current Liabilities	70,000
Decrease in Current Liabilities	10,000
Increase in Current Assets (Other than Cash and Cash Equivalents)	60,000
Income Tax Refund	10,000
Income Tax Paid	1,20,000

Answer:

Cash Flow from Operating Activities
	Particulars	(`)	(`)
	Profit as per Statement of Profit and Loss		8,00,000
	Add: Provision for Tax		1,10,000
	Add: Proposed Dividend Less: Income Tax Refund Less: Compensation for Natural Disaster		1,10,000 (10,000) (75,000)

	Profit Before Tax and Extraordinary items		9,35,000
	Items to be Added:
	Depreciation on Plant and Machinery	1,50,000
	Loss on sale of Investment	30,000	1,80,000
			11,15,000
	Items to be Deducted:
	Profit on Sale of Land	(90,000)
	Dividend Received	(20,000)	(1,10,000)
	Operating Profit before Working Capital Adjustments		10,05,000
	Add: Increase in Current Liabilities	70,000
	Add: Decrease in Current Assets	40,000	1,10,000
			11,15,000
	Less: Decrease in Current Liabilities	(10,000)
	Less: Increase in Current Assets	(60,000)	(70,000)
	Cash Generated from Operations		10,45,000
	Less: Tax Paid		(1,20,000)
	Cash Flow from operations after Tax		9,25,000
	Add: Compensation for Natural Disaster Add: Income Tax Refund		75,000 10,000
	Net Cash Flows from Operating Activities		10,10,000

Question 20:

Following information is related to ABC Ltd.:

STATEMMENT OF PROFIT AND LOSS for the year ended 31st March, 2023
Particulars ulars	Note No.	(`)
I. Revenue from Operations (Net Sales)		30,00,000
II. Other Income	1	45,000
III. Total Revenue (I + II)		30,45,000
IV. Expenses;
(a) Purchases of Stock-in-Trade		23,03,000
(b) Change in Inventories of Stock-in-Trade	2	(16,000)
(c) Depreciation and Amortisation Expenses		1,85,000
(d) Other Expenses	3	3,29,000
Total Expenses		28,01,000
V. Profit before Tax (III − IV)		2,44,000
VI. Less: Provision for Tax		64,000
VII. Profit after Tax (V – VI)		1,80,000

Notes to Accounts

Particulars	`
1. Other Income
(a) Dividend Received	5,000
(b) Gain (Profit) on Sale of Plant	40,000
	45,000
2. Change in Inventories of Stock-in-Trade
Opening Inventories	2,84,000
Less: Closing Inventories	3,00,000
	(16,000)
3. Other Expenses
(a) Office Expenses	58,000
(b) Selling Expenses	2,35,000
(c) Loss on Sale of Assets	36,000
	3,29,000

Other Information:	Balance as on 31st March, 2023 (`)	Balance as on 31st March, 2022 (`)
Trade Payables	2,78,000	2,50,000
Trade Receivables	4,52,000	4,15,000
Inventories	3,00,000	2,84,000
Office Expenses Outstanding	...	5,000
Selling Expenses Outstanding	25,000	22,000

Calculate Cash Flow from Operating Activities.

Answer:

Cash Flow from Operating Activities
	Particulars	(`)	(`)
	Profit as per Statement of Profit and Loss		1,80,000
	Add: Tax Expense		64,000
	Profit Before Taxation		2,44,000
	Items to be Added:
	Loss on Sale of Assets	36,000
	Depreciation and Amortisation Expenses	1,85,000	2,21,000
			4,65,000
	Items to be Deducted:
	Dividend Received	(5,000)
	Profit on Sale of Plant	(40,000)	(45,000)
	Operating Profit before Working Capital Adjustments		4,20,000
	Less: Decrease in Current Liabilities
	Office Expenses Outstanding		(5,000)
	Add: Increase in Current Liabilities
	Trade Payables	28,000
	Selling Expenses Outstanding	3,000	31,000
	Less: Increase in Current Assets
	Trade Receivables	(37,000)
	Inventories	(16,000)	(53,000)
	Cash Generated from Operations		3,93,000
	Less: Tax Paid		(64,000)
	Net Cash Flows from Operating Activities		3,29,000