Page 98 - DCOM302_MANAGEMENT_ACCOUNTING

Unit 5: Fund Flow Statement

(iii) During the year, part of fixed assets costing `20,000 was disposed for `24,000 and the Notes

profit is included in the profit and loss account.
(iv) Dividend paid during the year amounted to ` 80,000.
The following are the components to be considered for preparation of the statement of
changes working capital:
Current Assets:
Stock

Debtors
Bank
Current Liability:
Sundry creditors

The first step is to prepare the schedule of changes in the working capital.
Statement of changes in Working Capital

2009 ` 2010 ` Increase Decrease
in Working in Working
Capital Capital
Current Assets:
Stock 4,80,000 4,20,000 60,000
Debtors 4,20,000 9,10,000 4,90,000
Bank 2,98,000 3,94,000 96,000
11,98,000 17,24,000
Current Liability:
Sundry creditors 3,36,000 2,68,000 68,000

Working capital 8,62,000 14,56,000 6,54,000 60,000
Increase in working capital 5,94,000 5,94,000
14,56,000 14,56,000 6,54,000 6,54,000
The next step is to prepare the non-current accounts.

At first, the non-current asset account is to be prepared.

The first non-current asset account is fixed assets account.

In the additional information, the firm has sold the fixed assets worth `10,000 at `12,000.
The next step is to determine the worth of the sale transaction of the fi xed assets.
Sale value of the fi xed assets `24,000
Cost of the fixed assets sold `20,000

Profit on the sale of fi xed assets `4,000
The following is the journal entries
Entry for sale of the asset
During the sale, what happens in the fi rm

Debit - What comes in? Cash resources are coming inside.

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