(b) The following information is provided for Aarambh Limited: Particulars 31 st March 2023 (₹) 31 st March 2024 (₹) Profit and Loss a/c 5,400 (Dr.)…
CA Intermediate · Advanced Accounting · PYQS · May 2024
(b) The following information is provided for Aarambh Limited: Particulars 31 st March 2023 (₹) 31 st March 2024 (₹) Profit and Loss a/c 5,400 (Dr.) 37,800 Provision for Taxation 2,21,400 1,35,000 General Reserve 54,000 81,000 12% Debentures 1,18,800 2,91,600 Trade Payables 1,29,600 1,18,800 8% Current Investments 54,000 1,08,000 Property, plant and equipment (Gross) 3,99,600 3,99,600 Accumulated Depreciation 1,29,600 1,62,000 Trade Receivables (Gross) 81,000 2,61,360 Provision for Doubtful Debts 27,000 54,000 Inventories 1,35,000 81,000 Cash and Cash Equivalents 54,00 30,240 Additional information: (i) Income tax provided during the year 1,62,000. (ii) New debentures have been issued at the end of current financial year. (iii) New investments have been acquired at the end of the current financial year. You are required to calculate net Cash Flow from Operating Activities. (7 Marks + 7 Marks = 14 Marks)
Suggested Answer and Working Notes:
Cash Flow from Operating Activities ₹ Difference between Profit and Loss Account (37,800 + 5,400) 43,200 Add: Transfer to General Reserve (81,000-54,000) 27,000 Add: Adjustment for Provision for taxation 1,62,000 Profit Before tax 2,32,200 Add: Adjustment for Depreciation (1,62,000 - 1,29,600) 32,400 Add: Adjustment for provision for doubtful debt (₹ 54,000 -27,000) 27,000 Add: Debenture Interest Paid (1,18,800 × 12%) 14,256 Less: Income from Investments (54,000 × 8%) (4,320) Operating Profit before Working Capital changes 3,01,536 Decrease in Inventories (1,35,000-81,000) 54,000 Increase in Trade receivables (2,61,360-81,000) (1,80,360) Decrease in Trade payables (1,29,600-1,18,800) (10,800) Cash generated from operations 1,64,376 Income tax paid (2,48,400) Net Cash generated from Operating Activities (84,024) Working Note: Provision for taxation account ₹ ₹ To Cash (Paid) (Balancing figure) 2,48,400 By Balance b/d 2,21,400 To Balance c/d 1,35,000 By Profit and Loss A/c 1,62,000 3,83,400 3,83,400
Topics: AS 3
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