Q1.
Following are balance sheet of Vital Enterprises at December 31, 20x7 and 20x6 extracts
from profit and loss statement for 20x7. You are required to prepare cash flow statements under
the direct and indirect methods.
VITAL ENTERPRISES
Balance Sheet Dec. 31 20x7 Dec. 31 20x6
Rs. Rs.
Cash 7900 9700
A/R 8300 12700
Allowance for doubtful debts (1350) (1200)
Inventories 36000 40000
Furniture 80000 60000
Accumulated depreciation (24050) (16000)
Total 106800 105200
20x7 20x6
A/Payables 16000 20800
Debentures 20000
16000 40800
Share Capital 80000 56000
Retained Earnings 10800 8400
Total 106800 105200
Profit And Loss Statement, 20X7
Net Sales 95000
Cost of Goods Sold (44000)
Gross Profit 51000
Operating Expenses (including dep.) (28600)
Net Profit 22400
Dividends declared and paid 20000
During the year furniture costing Rs.10000 on which depreciation of Rs.8000 was provided, sold
for Rs.1500. The loss on disposal is included in selling and administrative expenses.
Q2. Following are balance sheet of maxims industries at December 31, 20x7 and 20x6 extracts
from profit and loss statement for 20x7. You are required to prepare cash flow statements under
the direct and indirect methods.
MAXIMS INDUSTRIES
Balance Sheet Dec. 31 20x7 Dec. 31 20x6
Rs. Rs.
Cash 15 17
Trade Receivables 140 110
Stock 75 60
Long term investments 25 15
Land 120 150
Equipment 150 50
Goodwill 70 80
Deferred Costs 6 9
Total 601 491
20x7 20x6
Trade Payables 63 128
Accrued Expenses 18 15
81 143
Capital 400 300
Accumulated Profits 70 20
General Reserves 35 28
Capital Reserves 15 --
Total 601 491
Additional Information;
1. A piece of land was disposed off during 20x7. Gain on sale credited to capital reserve.
There were no purchases of land.
2. During 20x7 equipment, book value Rs.8 was disposed of or Rs.6.
3. Depreciation charge for year amounted to Rs.8
4. Interim dividend Rs.15 was paid in 20x7.
5. No deferred costs were incurred during 20x7.
Required;
Cash flow statement for 20x7 under the indirect method.
.
Q.3 Network Enterprises
Balance Sheet Dec 31st Dec31st
Rs. Rs.
Cash 870 300
Trade receivables 660 600
Inventories 780 700
Equipment 3500 2400
Accumulated Depreciation (600) (450)
5210 3550
Trade payable 610 450
Debentures 300 400
910 850
Share capital 2800 2000
Inappropriate profit 1500 700
5210 3550
Additional Information:
1. Dividends declared and paid Rs.500
2. Certain fixed assets were acquired in exchange of shares issued. The recorded value was
Rs.800
3. There were no sale of fixed asset during the year
Required: Prepare the cash flow statement using indirect method.
Q.4
Given 31-Dec 31-Dec
Good Dealers Limited 2007 2006
Balance Sheet Rs. Rs.
Cash 125000 150000
150000 155000
A/c Receivables 0 0
Inventories 950000 700000
180000 130000
Equipment 0 0
Deferred Cost 150000 150000
452500 385000
0 0
A/c Payables 450000 500000
Accured Expenses 25000 100000
Provision for taxation 600000 500000
Term Finance
Certificates 750000
107500 185000
0 0
200000 100000
Share Capital 0 0
Accumulated Profits 500000 200000
General Reserves 950000 800000
452500 385000
0 0
Additional Information
1. Tax provision of Rs 500000 was made for 2007
2. the company paid 20% dividend on ordinary shares for the year ended Dec 31st 2006, on March 2007
3. Depreciation charge during 2007 amounted to Rs. 200000
4. Equipment with a book value of Rs. 200000 was sold for Rs. 180000
5. During the year Rs.50000 were incurred on issue of shares. The amount was charged to deferred cost.
Required:
Cash Flow Statement for 2007 under the indirect
method.
