Page 31 - MA12

3.6 Management Accounting (Section B)—ISC XII

Notes to Accounts
Particulars `
1. Other Income
Rent 15,000
Miscellaneous 7,000
22,000
2. Other Expenses
Manufacturing Expenses 30,000
Insurance 9,000
Administration Expenses 47,000
Selling and Distribution Expenses 58,000
Loss on Sale of Assets 30,000
1,74,000

Additional Information: 31st March, 2019 (`) 31st March, 2018 (`)
1. Wages Payable 10,000 ...
2. Salaries Payable 25,000 ...
3. Prepaid Insurance 3,000 ...
4. Accrued Commission 7,000 ...
Solution: CASH FLOW FROM OPERATING ACTIVITIES
Particulars `
Net Loss as per Statement of Profit and Loss before Tax (22,000)
Adjustments for Non-Cash and Non-Operating Items:
Add: Depreciation and Amortisation Expense 50,000
Loss of Sale of Assets 30,000 80,000
58,000
Less: Non-Operating Income: Other Incomes (Rent and Miscellaneous) 22,000
Operating Profit before Working Capital Changes 36,000
Add: Increase in Current Liabilities:
Wages Payable 10,000
Salaries Payable 25,000 35,000
71,000
Less: Increase in Current Assets:
Inventories (` 96,000 – ` 80,000) 16,000
Accrued Commission 7,000
Prepaid Insurance 3,000 26,000
Cash Flow from Operating Activities 45,000

Illustration 4.
Sainath Enterprises Ltd. issued 1,00,000 Equity Shares of ` 10 each to its existing shareholders
on the condition that they shall also subscribe 10,000; 10% Debentures of ` 100 each at
a premium of 10%.
All the shares and debentures were subscribed and amount was received.
The company incurred expenses on issue of shares and debentures amounting to ` 1,00,000.
You are required to calculate Cash Flow from Financing Activities for the period.