For the year ended 31st March $\displaystyle 2025$, Sons Ltd. made a profit of ₹ $\displaystyle 4,00,000$ after charging depreciation of ₹ $\displaystyle 75,000$ on fixed assets and a transfer of ₹ $\displaystyle 1,50,000$ to general reserve. Goodwill written off during the year was ₹ $\displaystyle 80$,000. The company sold machinery of the book value of ₹ $\displaystyle 90,000$ at ₹ $\displaystyle 95$,000. During the year, trade receivables increased by ₹ $\displaystyle 40,000$ and trade payables increased by ₹ $\displaystyle 30$,000. Prepaid expenses increased by ₹ $\displaystyle 2,000$ and outstanding wages decreased by ₹ $\displaystyle 20$,000. Calculate cash flows from operating activities.

Calculation of cash flows from operating activities : Particulars (₹) Net Profit before tax (Working Note $\displaystyle 1$) $\displaystyle 5,50,000$ Adjustment for- Add: Depreciation on fixed assets $\displaystyle 75,000$ Add: Goodwill written off $\displaystyle 80,000$ Less: Gain on Sale of Machinery $\displaystyle (5,000)$ Operating Profit before Working Capital Changes $\displaystyle 7,00,000$ Add: Increase in Trade Payables $\displaystyle 30,000$ Less: Increase in Trade Receivables $\displaystyle (40,000)$ Less: Increase in Prepaid expenses $\displaystyle (2,000)$ Less: Decrease in outstanding wages $\displaystyle (20,000)$ Cash inflows from operating activities $\displaystyle 6,68,000$ Working Note $\displaystyle 1$: Calculation of Net Profit before tax: (₹) Net Profit $\displaystyle 4,00,000$ Add : Amount transferred to general reserve $\displaystyle 1,50,000$ Net Profit before tax: $\displaystyle 5,50,000$ Part B OPTION II (Computerised Accounting)