From the balance Sheet of Mohan Ltd. Prepare a Cash Flow Statement Liabilities 2

Question

From the balance Sheet of Mohan Ltd. Prepare a Cash Flow Statement

Liabilities 2006 2007 Assets 2006 2007 Equity share capital    200,000.00    300,000.00 Fixed Assets    400,000.00    600,000.00 Profit & Loss    160,000.00    200,000.00 Stock    130,000.00    150,000.00 Bank Loan    100,000.00      80,000.00 Debtors    100,000.00      50,000.00 Acc. Depreciation      80,000.00    100,000.00 Bills Receivable      20,000.00      30,000.00 Creditor    140,000.00    120,000.00 Bank      90,000.00      30,000.00 Proposed Dividend      60,000.00      70,000.00    740,000.00    870,000.00    740,000.00    870,000.00

Explanation / Answer

Note: Here in 2007 assets total given as $870,000 but its actual total is $860,000. Assumptions: 1. I treated bank balance of 2007 as$40,000 (Due to difference in totals), 2. Current year income is calculated as: Total profit & Loss account balance of 2007 - Profit & Loss account balance of 2006 year. 3. To calculating cash flow from operating activities: Increased current assets has to deduct, Decreased current assets has to add, Increased current liabilities has to add, Decreased current liabilities has to deduct. 4. All amounts are treated as $. Cash Flow Statement of Mohan Ltd. (Indirect Method): Particulars Amount Amount Cash Flow From Operating Activities: Profit and loss of 2007 (200,000 - 160,000) $40,000 Add: Depreciation (100,000 - 80,000) $20,000 Add: Collections from debtors (100,000 - 50,000) $50,000 Add: Increase in proposed dividend (70,000 - 60,000) $10,000 Less: Stock purchases (150,000 - 130,000) ($20,000) Less: Increase in bills receivable (30,000 - 20,000) ($10,000) Less: Decrease in creditors (140,000 - 120,000) ($20,000) Net Cash Flow From Operating Activities: $70,000 Cash Flow From Investing Activities: Less: Purchase of fixed assets (600,000 - 400,000) ($200,000) Net Cash Flow From Investing Activities: ($130,000) Cash Flow From Financing Activities: Add: Issue of equity shares (300,000 - 200,000) $100,000 Less: Repayment of bank loan (100,000 - 80,000) ($20,000) $80,000 Net Cash Flow From Financing Activities: ($50,000) Add: Opening Bank Balance $90,000 Ending Bank Balance: $40,000 Thank you..... Particulars Amount Amount Cash Flow From Operating Activities: Profit and loss of 2007 (200,000 - 160,000) $40,000 Add: Depreciation (100,000 - 80,000) $20,000 Add: Collections from debtors (100,000 - 50,000) $50,000 Add: Increase in proposed dividend (70,000 - 60,000) $10,000 Less: Stock purchases (150,000 - 130,000) ($20,000) Less: Increase in bills receivable (30,000 - 20,000) ($10,000) Less: Decrease in creditors (140,000 - 120,000) ($20,000) Net Cash Flow From Operating Activities: $70,000 Cash Flow From Investing Activities: Less: Purchase of fixed assets (600,000 - 400,000) ($200,000) Net Cash Flow From Investing Activities: ($130,000) Cash Flow From Financing Activities: Add: Issue of equity shares (300,000 - 200,000) $100,000 Less: Repayment of bank loan (100,000 - 80,000) ($20,000) $80,000 Net Cash Flow From Financing Activities: ($50,000) Add: Opening Bank Balance $90,000 Ending Bank Balance: $40,000

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.