Example of cash flow statement, Cost Accounting

1. Shares were certified at a premium of Rs. 1.50' per share.

2. Throughout the year Taxation liability regarding of 2002 was Rs, 20,000 and paid.

3. Throughout the year, Rs. 11,000 was provided for depreciation on Machinery and Plant.

4.  An item of the plant the written down value Rs. 20,000 was sold on Rs. 25,000.

5. Throughout the year, a dividend @ 7.5 percent was paid.

6. Part of the investment costing Rs. 30,000 was sold at Rs. 35,000 and the profit was considered in Profit and Loss account.

Depends on the above information, we initially set ourselves to ascertain the cash inflow and outflow regarding Investment, Machineries and Plant and Tax, that cannot be determined through a mere inspection of their balances in two balance sheets. The duty is accomplished through preparing the respective accounts and examining the effects of the additional information on each of such.  It is followed through preparation of an "Adjusted the Profit and Loss a/c" to determine the actual net profit earned throughout the period, in the light of the additional information now obtainable. In the last stage, the "Cash flow statement" is prepared as in Table 3.

Investment Account

To Opening balance

75,000

By Sale

 

35,000

To P & L a/c (profit on sale)

5,000

By Closing balance

 

1,30,000

To Bank (Purchases)

85,000

 

 

 

 

 

1,65, 000

 

 

 

1,65, 000

Plant & Machinery Account

To Opening balance                          1,10,000                  By Sale                                     25,000

 To P & L a/c (profit on sale)             5,000                      By P & L a/c- depreciation   11,000

To Bank                                                91,000                     By Closing balance             1,70,000

         2,06,000                                                                     2,06,000

Provision for taxation

To Bank

20,000

By Opening Balance

20,000

By Closing balance

35,000

By P & L a/c

35,000

        55,000                                                                             55,000

Adjusted Profit and Loss Account

To General Reserve                       15,000 By Opening balance

40,000

To Dividend                                  30,000 By Dividend Equalisn. Reserve

10,000

To Provision for tax                      35,000 By Plant and Machineries profit on sale

5,000

To Depreciation                             11,000 By Investment-profit on sale.

5,000

By profit for the year

 

(balancing figure)

1,01,000

To Goodwill                                  10,000

 

To Preliminary expenses                 5,000

 

To Closing balance                        55,000

 

1,61,000

1,61,000

Table 3

 

Statement of Cash flow

 

for the period 1.4 2002 to 31.3.2003

 

 

Rs.

Opening Cash balance as on 1.4.2002

Add/(deduct): Cash flow from

Operating Activities

Net profit (Ref: P&L Adjustment a/c)                                                       1,01,000

Add:

20,000

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Posted Date: 4/9/2013 1:58:03 AM | Location : United States







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