FINANCIAL ACCOUNTING (MGT401)

ASSIGNMENT NO. 01
MARKS: 10
Solution:

Cash flow from Operating Activities:

Rs.
Profit before tax 211,000
Adjustments for:
Add: Depreciation 30,000
Add: Loss on sale of non-current assets 5,000
Add: Interest expense 15,000

Operating cash flow before working capital changes 261,000

Adjustment for working capital changes:
(increase)/decrease in current assets
(Increase)/decrease in inventories 15,000
(increase)/decrease in trade receivables 20,000
increase/(decrease) in current liabilities
Increase/(decrease) in trade payables 23,000
Increase/(decrease) in accrued expenses 3,500

Cash generated from operations 322,500

Less:
Interest paid (w-1) (12.800)
Income tax paid (w-2) (5,000)
Net cash from operating activities 304,700

W-1
Interest Expense

Dr. Rs. Rs.

Cr.
Cash (bal.) 12,800 b/d 11,800
c/d 14,000 P and loss a/c 15,000
26,800 26,800
W-2
Income tax Expense

Dr. Rs. Rs.

Cr.
Cash (bal.) 5,000 b/d 19,000
c/d 26,000 P and loss a/c 12,000
31,000 31,000