Answer to Question #297866 in Accounting for Yaku

Question

profit and loss,

2019 2020 2021

Sales

Cash 200 480 800

Credit 1800 4320 7200

2000 4800 8000

Cost of goods sold 1240 2832 4800

Gross Profit 760 1968 3200

Operating expenses:

General, administration 80 450 1000

Depreciation 100 400 660

Interest expense (on borrowing) 60 158 340

Profit before tax (PBT) 520 960 1200

Tax 156 288 360

Profit after Tax (PAT) 364 672 840

financial position

Non-Current assets 1900 2500 4700

Current Assets

Cash equivalents 40 100 106

Accounts receivable 300 1500 2100

Inventories 320 1500 2250

Total 2560 5600 9156

Equity share capital 1200 1600 2000

Reserves & Surplus 364 1036 1876

Long term borrowings 736 1236 2500

Current liabilities 260 1728 2780

Total 2560 5600 9156

Prepare statement of cash flow using indirect method

Answer 1

Cash Flow Statement

Cash flow from operating activities

Profit after Tax......................................................................................840

Less : Increase in Accounts Receivable (2100-1500).........................-600

Less : Increase in inventories (2250-1500)............................................-750

Add : Increase in current liabilities (2780-1728)................................1,052

Net cash flow from operating activities...........................................542

Cash flow from investing activities

Less : Purchase of long term assets (4700-2500)...............................-2,200

Net cash flow from investing activities...........................................-2,200

Cash flow from financing activities

add : Increase in long term borrowing (2500-1236)..............................1,264

add : issuance of shares (2000-1600)....................................................400

Net cash flow from financing activities.............................................1,664

Net increase / Decrease in cash during the period.................................6

Opening cash balance.............................................................................100

closing cash balance...............................................................................106

NOTE : Depreciation expense must be added back to net income but after adding dep expense the closing balance of the cash is not getting matched. So we can assume that there must be any other cash expense instead depreciation.