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)