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) rupee50,000 was charged as depreciation on Plant and Machinery. A machinery costing rupee60,000 (Book Value Rupees 45,000) was sold for Rupees 42,000. 
(ii) Bank loan was repaid on 1^st 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:

  

Cash Flow from Investing Activities:
Proceeds from Sale of Machinery = |42, 000
Purchase of Machinery = |3, 25, 000

Net Cash Flow from Investing Activities = |(3, 25, 000 − 42, 000)
                                                                = |(2, 83, 000) (Outflow)

 Cash Flow from Financing Activities: 
Proceeds from Share Capital = |2, 00, 000
Repayment of Bank Loan = |2, 20, 000

Net Cash Flow from Financing Activities = |(2, 00, 000 − 2, 20, 000)
                                                                = |(20, 000) (Outflow)