Page 176 - DMGT403_ACCOUNTING_FOR_MANAGERS

Unit 8: Cash Flow Statement

Dr. Land and Building Cr. Notes

To Balance B/d (Opening) 2,20,000
To Cash (Purchase) 80,000 By Balance c/d (Closing) 3,00,000
3,00,000 3,00,000

The next step is to prepare adjusted profit and loss account.
Dr. Adjusted profit and loss account Cr.

To Machinery A/c (Loss on sale) 4,000 By Balance B/d -----------
To Depreciation provided during the year 90,000 By Cash from operations 2,14,000
To Balance c/d 1,20,000
2,14,000 2,14,000

The next most important step is to compare the current assets.
Increase in creditors - 20,000 - cash inflow

Loan from SBI - 50,000 - cash inflow
Decrease in stock - 10,000 - cash inflow
Loan repaid - 1,20,000 - cash outflow
Decrease in bills payable - 20,000 - cash outflow

Increase in Debtors - 20,000 -cash outflow
Cash flow statement
Inflow Outflow
Opening cash balance 40,000 Loan repaid 1,20,000
Creditors 20,000 Bills payable 20,000
Loan from SBI 50,000 Debtors 20,000
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

Example: Data Ltd. supplies you the following balance on 31 st Mar. 1995 and 1996.

Liabilities 1995 1996 Assets 1995 1996
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 20,080 21,120 Goodwill 20,000 10,000
Surpluses
2,06,200 2,06,400 2,06,200 2,06,400

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