From the following data of Vishnu Ltd. prepare cash flow statement from Operating activities using direct method as per AS 3: 31.03.2024 (₹)…

CA Intermediate · Advanced Accounting · RTP · May 2025
From the following data of Vishnu Ltd. prepare cash flow statement from Operating activities using direct method as per AS 3: 31.03.2024 (₹) 31.03.2023 (₹) Current Assets: Inventory 1,20,000 1,65,000 Trade receivables 2,05,000 1,88,000 Cash & cash equivalents 35,000 20,500 Current Liabilities: Trade payable 1,95,000 2,15,000 Provision for tax 48,000 65,000 Summary of Statement of Profit and Loss ₹ ₹ Sales 85,50,000 Less: Cost of sales (56,00,000) 29,50,000 Other Income Interest income 20,000 Fire insurance claim received 1,10,000 1,30,000 30,80,000 Depreciation (24,000) Administrative and selling expenses (15,40,000) Interest expenses (36,000) Foreign exchange loss (18,000) (16,18,000) Net Profit before tax and extraordinary income 14,62,000 Income Tax (95,000) Net Profit 13,67,000 Additional information: (1) Trade receivables and Trade payables include amounts relating to credit sale and credit purchase only. (2) Foreign exchange loss represents increment in liability of a long-term borrowing due to exchange rate fluctuation between acquisition date and balance sheet date.

Suggested Answer and Working Notes:

Cash Flow Statement from operating activities of Vishnu Ltd. for the year ended 31 March 2024 (Direct Method) Particulars ₹ Operating Activities: Cash received from Trade receivables (W.N. 3) 85,33,000 Less: Cash paid to Suppliers (W.N.2) 55,75,000 Payment for Administration and Selling expenses 15,40,000 Payment for Income Tax (W.N.4) 1,12,000 (72,27,000) 13,06,000 Adjustment for extraordinary items (fire insurance claim) 1,10,000 Net Cash Flow from Operating Activities 14,16,000 Working Notes: 1. Calculation of total purchases Cost of Sales = Opening stock + Purchases – Closing Stock 56,00,000 = 1,65,000 + Purchases - 1,20,000 Purchases = 55,55,000 2. Calculation of cash paid to Suppliers Trade Payables ₹ ₹ To Bank A/c (balancing figure) 55,75,000 By Balance b/d 2,15,000 To Balance c/d 1,95,000 By Purchases (W.N. 1) 55,55,000 57,70,000 57,70,000 3. Calculation of cash received from Customers Trade Receivables ₹ ₹ To Balance b/d 1,88,000 By Bank A/c (balancing figure) 85,33,000 To Sales 85,50,000 By Balance c/d 2,05,000 87,38,000 87,38,000 4. Calculation of tax paid during the year in cash Provision for tax ₹ ₹ To Bank A/c (balancing figure) 1,12,000 By Balance b/d 65,000 To Balance c/d 48,000 By Profit and Loss A/c 95,000 1,60,000 1,60,000

Topics: AS 3

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