Page 126 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 6: Cash Flow Statement

Loan from SBI 50,000 Debtors 20,000 Notes
Stock 10,000 Land and buildings purchased 80,000
Machinery cash sale 26,000 Drawings 70,000
Cash from operations 2,14,000 Closing cash balance 50,000
3,60,000 3,60,000
4. Data Ltd. supplies you the following balance on 31 st Mar. 2005 and 2006.

Liabilities 2005 2006 Assets 2005 2006
Share capital 1,40,000 1,48,000 Bank balance 18,000 15,600
Bonds 24,000 12,000 Accounts Receivable 29,800 35,400
Accounts payable 20,720 23,680 Inventories 98,400 85,400
Provision for debts 1,400 1,600 Land 40,000 60,000
Reserves and Surpluses 20,080 21,120 Goodwill 20,000 10,000
2,06,200 2,06,400 2,06,200 2,06,400
Additional Information:
(i) Dividends amounting to ` 7,000 were paid during the year 2006.
(ii) Land was purchased for ` 20,000.

(iii) ` 10,000 were written off on goodwill during the year.
(iv) Bonds of ` 12,000 were paid during the course of the year.
(v) You are required to prepare a cash fl ow statement.
The first step is to prepare non-current accounts.

The first step is to prepare non-current assets and liabilities account.

As far as non-current asset account is concerned, Land account has to be prepared.
The opening balance is lesser than the closing balance of the Land account of the fi rm.
It is only due to purchase of land only inflated the value of the land at the end of the time

horizon.
Debit what comes in - Land has come in.
Credit what goes out- cash resources have gone out of the firm at the moment of

purchase.
` `
Land A/c Dr 20,000
To cash A/c 20,000

Dr. Land A/C Cr.
Particulars ` Particulars `
To Balance B/d (Opening) 40,000
To Cash (Purchase) 20,000 By Balance c/d (Closing) 60,000
60,000 60,000
The non-current liability account is to be prepared.
The first non-current liability account that is affected is the share capital account.

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