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Unit 12: Fund Flow Analysis
Notes
Example: From the following relating to Panasonic Ltd., prepare funds fl ow statement.
Balance Sheet of Panasonic Ltd.
as on 31st December
Liabilities 2004 (`) 2005 (`) Assets 2004 (`) 2005 (`)
Share capital 6,00,000 8,00,000 Fixed assets 3,80,000 4,20,000
Reserves 2,00,000 1,00,000 Accounts receivable 2,10,000 3,00,000
Retained earnings 60,000 1,20,000 Stock 3,00,000 3,90,000
Accounts payable 90,000 2,70,000 Cash 60,000 1,80,000
9,50,000 12,90,000 9,50,000 12,90,000
Additional Information:
1. The company issued bonus shares for ` 1,00,000 and for cash ` 1,00,000.
2. Depreciation written off during the year ` 30,000.
Solution:
The first step is prepare the statement of changes in working capital
Schedule of Changes in Working Capital
2004 2005 Increase in Decrease in
Working Capital Working Capital
Current Asset:
Cash 60,000 1,80,000 1,20,000 —
Stock in trade 3,00,000 3,90,000 90,000 —
Accounts receivable 2,10,000 3,00,000 90,000 —
5,70,000 8,70,000
Current Liabilities:
Accounts payable 90,000 2,70,000 1,80,000
Working capital 4,80,000 6,00,000 3,00,000 1,80,000
Increase in working capital 1,20,000 1,20,000
6,00,000 6,00,000 3,00,000 3,00,000
The next step is to prepare the non-current account.
First non-current asset account should have to be prepared.
Dr Fixed Assets A/c Cr
Particulars ` ` Particulars ` `
To Balance b/d 3,80,000 By Depreciation (Adjusted Profi t & 30,000
Loss A/c )
To Cash (Purchase) Balancing fig. 70,000 By Balance c/d 4,20,000
4,50,000 4,50,000
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