Question

From the following Balance Sheet of Yogita Ltd., calculate ‘Cash flows from Investing Activities’ and ‘Cash flows from Financing Activities’. Show your working properly. 
Additional Information: 
(i) Rs.50,000 was charged as depreciation on Plant and Machinery. A machinery costing Rs.60,000 (Book Value Rs.45,000) was sold for Rs.42,000. 
(ii) Bank loan was repaid on 1 April, 2022. 
 

Hint:

Ensure all transactions affecting cash flows are classified under the correct activity: Operating, Investing, or Financing. Use proper journal entries for any asset sales or liability settlements.

Answer 1

Journal Entries: \[ \begin{array}{|l|c|c|} \hline \textbf{Particulars} & \textbf{Dr. Amount (Rs.)} & \textbf{Cr. Amount (Rs.)} \\ \hline \text{Bank A/c Dr.} & 42,000 & \\ \text{Loss on Sale of Machinery A/c Dr.} & 3,000 & \\ \text{To Machinery A/c} & & 45,000 \\ \hline \text{Depreciation A/c Dr.} & 50,000 & \\ \text{To Accumulated Depreciation A/c} & & 50,000 \\ \hline \text{Machinery A/c Dr.} & 3,25,000 & \\ \text{To Bank A/c} & & 3,25,000 \\ \hline \text{Bank Loan A/c Dr.} & 2,20,000 & \\ \text{To Bank A/c} & & 2,20,000 \\ \hline \text{Share Capital A/c Dr.} & 2,00,000 & \\ \text{To Bank A/c} & & 2,00,000 \\ \hline \end{array} \] Cash Flow from Investing Activities: \[ \begin{aligned} \text{Proceeds from Sale of Machinery} &= Rs.42,000 \\ \text{Purchase of Machinery} &= Rs.3,25,000 \\ \text{Net Cash Flow from Investing Activities} &= Rs.(3,25,000 - 42,000) \\ &= Rs.(2,83,000) \quad \text{(Outflow)} \end{aligned} \] Cash Flow from Financing Activities: \[ \begin{aligned} \text{Proceeds from Share Capital} &= Rs.2,00,000 \\ \text{Repayment of Bank Loan} &= Rs.2,20,000 \\ \text{Net Cash Flow from Financing Activities} &= Rs.(2,00,000 - 2,20,000) \\ &= Rs.(20,000) \quad \text{(Outflow)} \end{aligned} \]