(a) From the following information extracted from the books of Kant Ltd., calculate 'Cash Flows from Operating Activities'. Profit earned during the…

Calculation of Cash Flow from Operating Activities Particulars Amount (₹) Net Profit before Tax and Extraordinary Items (W.N $\displaystyle 1$) $\displaystyle 3,00,000$ Add: Non Cash & Non-Operating Items Depreciation on Machinery ₹$\displaystyle 50,000$ Goodwill written off ₹$\displaystyle 30,000$ Loss on sale of Machinery ₹$\displaystyle 10,000$ $\displaystyle 90,000$ Operating Profit before Working Capital Changes $\displaystyle 3,90,000$ Less: Decrease in Current Liabilities & Increase in Current Assets Increase in Trade Receivables (₹$\displaystyle 2,00,000$) Decrease in Trade Payables (₹$\displaystyle 10,000$) ($\displaystyle 2,10,000$) Net Cash inflow from Operating Activities $\displaystyle 1,80,000$ Working Note :- 1. Calculation of Net Profit before Tax and Extraordinary Items ₹ Profit earned during the year = $\displaystyle 1,95,000$ + Transfer to General Reserve = $\displaystyle 1,05,000$ $\displaystyle 3,00,000$ Q.(b) From the following information….. Ans. Calculation of Cash Flow from Investing Activities Particulars Amount (₹) Purchase of Machinery (W.N.1) ($\displaystyle 12,00,000$) Proceeds from the sale of Machinery $\displaystyle 5,00,000$ Net cash outflow from Investing Activities ($\displaystyle 7,00,000$) Working Notes: 1. Dr . Machinery A/c Cr. Particulars Amount Particulars Amount (₹) (₹) To Balance b/d $\displaystyle 24,00,000$ By Accumulated Depreciation A/c $\displaystyle 40,000$ By Bank A/c $\displaystyle 5,00,000$ To Bank A/c $\displaystyle 12,00,000$ By Statement of Profit & Loss $\displaystyle 2,60,000$ (Balancing figure) By Balance c/d $\displaystyle 28,00,000$ $\displaystyle 36,00,000$ $\displaystyle 36,00,000$ Dr. Accumulated Depreciation A/c Cr. Particulars Amount Particulars Amount (₹) (₹) To Machinery A/c $\displaystyle 40,000$ By Balance b/d $\displaystyle 2,00,000$ To Balance c/d $\displaystyle 3,00,000$ By Statement of Profit & Loss $\displaystyle 1,40,000$ $\displaystyle 3,40,000$ $\displaystyle 3,40,000$