From the following balances, calculate Cash from Operations:

Cash Flow Matrix

31st December
Particulars
2003 (Rs.) 2004(Rs.)
Debtors 50,000 47,000 +3k
Bills Receivable 10,000 12,500 -2.5k
Creditors 20,000 25,000 +5k
CA
Bills Payable 8,000 6,000 -2k
Outstanding Expenses 1,000 1,200 +200
CL
Prepaid Expenses 800 700 +100
Accrued Income 600 750 -150
Income received in Advance 300 250 -50
Profit made during the year - 130,000

In the Books of M/s _______________

Cash Flow (Operations) Statement for the year ending 31 Dec `04
Profit made during the year 130000
Add:
a. Decrease in Debtors 3,000
b. Increase in Creditors 5,000
c. Increase in Outstanding
Expenses 200
d. Decrease in Prepaid
Expenses 100 8300

Less:
a. Increase in Bills Receivable (2,500)
b. Decrease in Bills Payable (2,000)
c. Increase in Accrued Income (150)
d. Decrease in Income
received in Advance (50) (4,700)

Net Cash Flows from 133,600

Operations during the year
Cash Flow Matrix

Cash Cash
Decrease Increase

Cash Cash
Increase Decrease
Statement of financial position of Mr. Arun is as given below:

1st Jan 2008 31st Dec 1st Jan 2008 31st Dec
LIABILITIES ASSETS
(Rs.) 2008 (Rs.) (Rs.) 2008 (Rs.)
Accounts Payable 29000 25000 Cash 40000 30000
Capital 739000 615000 Debtors 20000 17000 +3k
Stock 8000 13000 -5k
Building 100000 80000 +20kDepn
Other Fixed Assets 600000 500000 +100kDepn
TOTAL 768000 640000 TOTAL 768000 640000

Additional Information:
1. There were no withdrawals
2. There were no Purchases or Sales of either Building or Fixed Assets
 -4k

+20kDepn
+100kDepn
 Cash Flow Statement for the year ending 31 Dec 2007
Amount Amount
Particulars (Rs.) (Rs.)

Cash Flows from Operating Activities:

Funds from Operations (WN # 1) 88300

Adjustments for:

Decrease in Stock 46000

Decrease in Debtors 15800

Decrease in Creditors (14800)

Tax Paid (28000)
Net Cash Flows from Operating Activities 107300
Cash Flows from Investing Activities:
Sale of Machinery 1800
Purchase of Machinery (8000)
Net Cash used for Investing Activities (6200)

Cash Flows from Financing Activities:

Payment of Dividend (23000)
Mortgage Loan repaid (70000)
Net Cash used for Financing Activities (93000)

Net Increase in Cash and Cash Equivalents 8100

Cash and Cash Equivalents as on 1st Jan 2007 500

Cash and Cash Equivalents as on 31st Dec 2007 8600

(Cash Rs. 600 + Bank Rs. 8000)
Working Notes
Working Note # 1: Adjusted Profit and Loss Account
Particulars Amount (Rs.) Particulars Amount (Rs.)

By Balance b/d (2005

To Dividend 23000 Profit) 30500

By Funds from
To Depreciation on Operations (Balancing
Building 10000 Figure) 88300
To Provision for Tax 33000
To Transfer to General
Reserve 10200
To Depreciation on
Machinery 12000
To Balance c/d (2006
Profit) 30600
TOTAL 118800 TOTAL 118800
 Working Note # 2: Machinery Account
Particulars Amount (Rs.) Particulars Amount (Rs.)
To Balance b/d 150000 By Depreciation 12000
To Share Capital 25000 By General Reserve 200
To Bank 8000 By Bank 1800
By Balance c/d 169000
TOTAL 183000 TOTAL 183000

Working Note # 3: General Reserve

Particulars Amount (Rs.) Particulars Amount (Rs.)
To Machinery A/c 200 By Balance b/d (2005) 50000
To Balance c/d (2006) 60000 By Profit and Loss A/c 10200
TOTAL 60200 TOTAL 60200

Working Note # 3: Provision for Taxation

Particulars Amount (Rs.) Particulars Amount (Rs.)
To Bank 28000 By Balance b/d (2005) 30000
To Balance c/d (2006) 35000 By Profit and Loss A/c 33000
TOTAL 63000 TOTAL 63000