Provision for Depreciation Account Particulars (Rs.) Particulars (Rs.) 2,000 By Balance b/d 6,000 To Furniture A/c (Balancing figure being accumulated By Depreciation A/c 5,000 depreciation on sold furniture) To Balance c/d 9,000 11,000 11,000 Computation for Gain or Loss on Sale of Furniture Cost of sold furniture 4,000 Less: Accumulated Depreciation 2,000 Value of the sold furniture on the date of sale 2,000 Less: Sale price 5,000 Gain on sale of furniture 3,000 Gain on sale Rs. 3,000 subtract from net profit under Operating Activity. 1: 2: Purchase of furniture Rs. 12,000 is involves an outflow of cash under Investing Activity. 3: Sale of Rs. 5,000 is involves an inflow of cash under Investing Activity. 4: Depreciation charged on furniture during the year Rs. 5,000 added back to net profit under operating activity. (24) X Ltd, made a profit of Rs. 1,00,000 after considering the following items. Depreciation on fixed assets Rs. 20,000 (b) Writing off preliminary expenses Rs. 10,000. (c)Loss on sale of furniture Rs. 1,000. (d) Provision for taxation Rs. 1,60,000. (e) Transfer to General Reserve Rs. 14,000. (f) Profit on sale of machinery Rs. 6,000. Items 31/03/2013(Rs.) 31/03/2014 (Rs.) Debtors 24,000 30,000 Creditors 20,000 30,000 Bills Receivable 20,000 17,000 Bills Payable 16,000 12,000 Prepaid Expenses 400 600 Solution: Calculation of Cash Flow from Operating Activities Particulars (Rs.) Net Profit before Tax 2,74,000 Net Profit 1,00,000 Provision for Taxation 1,60,000 Transfer to General Reserve 40,000 Adjustment for:
Provision for Depreciation Account Particulars (Rs.) Particulars (Rs.) To Furniture A/c (Balancing figure being accumulated depreciation on sold furniture) To Balance c/d 2,000 9,000 By Balance b/d By Depreciation A/c 6,000 5,000 11,000 11,000 Computation for Gain or Loss on Sale of Furniture Cost of sold furniture 4,000 Less: Accumulated Depreciation 2,000 Value of the sold furniture on the date of sale 2,000 Less: Sale price 5,000 Gain on sale of furniture 3,000 1: Gain on sale Rs. 3,000 subtract from net profit under Operating Activity. 2: Purchase of furniture Rs. 12,000 is involves an outflow of cash under Investing Activity. 3: Sale of Rs. 5,000 is involves an inflow of cash under Investing Activity. 4: Depreciation charged on furniture during the year Rs. 5,000 added back to net profit under operating activity. (24) X Ltd, made a profit of Rs. 1,00,000 after considering the following items. Depreciation on fixed assets Rs. 20,000 (b) Writing off preliminary expenses Rs. 10,000. (c)Loss on sale of furniture Rs. 1,000. (d) Provision for taxation Rs. 1,60,000. (e) Transfer to General Reserve Rs. 14,000. (f) Profit on sale of machinery Rs. 6,000. Items 31/03/2013(Rs.) 31/03/2014 (Rs.) Debtors Creditors Bills Receivable Bills Payable Prepaid Expenses 24,000 20,000 20,000 16,000 400 30,000 30,000 17,000 12,000 600 Solution: Calculation of Cash Flow from Operating Activities Particulars (Rs.) Net Profit before Tax Net Profit 1,00,000 Provision for Taxation 1,60,000 Transfer to General Reserve 40,000 Adjustment for: 2,74,000
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