Page 218 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Unit 12: Fund Flow Analysis

Provision for Bad Debts 2,000 Notes
Transfer to General Reserve 2,000
Preliminary Expenses written off 6,000

Goodwill written off 4,000
Dividend Received 10,000
Proposed Dividend 12,000
Solution:
Calculation of Fund From Operation
First Method

Closing Balance of Profit & Loss A/c 1,20,000
Less: Opening Balance 50,000

Balance Forward 70,000
Add: Non-fund/Non-operating Charges
Depreciation on Plant 10,000
Provision for Taxation 8,000
Loss on Sale of Plant 4,000
Discount on Issue of Debentures 4,000
Provision for Bad Debts 2,000
Transfer to General Reserve 2,000
Preliminary Expenses off 6,000

Goodwill Written off 4,000
Proposed Dividend 12,000

1,22,000
Less: Refund of Tax 6,000
Profit on Sale of Building 10,000

Dividend Received 10,000

Fund from Operations 96,000

Second Method:
Adjusted Profit & Loss A/c

To Depreciation on Plant 10,000 By Opening Balance b/d 50,000
To Provision for Taxation 8,000 By Profit on Sale of Building 10,000

To Loss on Sale of Plant 4,000 By Dividend Received 10,000
To Discount on issue of debentures 4,000 By Refund of Tax 6,000
To Provision for bad debts 2,000 By Balancing Figure 96,000
To Transfer to general reserve 2,000 Fund from Operations
To Preliminary expenses off 6,000
To Goodwill written off 4,000
Contd...

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