Question : Sun pharma Ltd., reported Net Profit after Tax of Rs. 6,10,000 for the year ended 31 st March, 2020. The relevant extract from Balance Sheet as at 31 st March, 2020 is:
| Particulars | 31st march, 2020(Rs) | 31st march, 2019(Rs) |
| Inventories | 1,15,000 | 1,25,000 |
| Prepaid Expenses | 20,000 | 6,000 |
| Trade Payables | 1,10,000 | 80,000 |
| Provision for Tax | 20,000 | 15,000 |
Depreciation charged on Plant and Machinery Rs. 55,000, tax provided during the year Rs 15,000 and insurance claim received Rs. 50,000, gain (profit) on sale of investment Rs. 20,000 appeared in the Statement of Profit and Loss for the year ended 31st March, 2020.
Cash Flow from Operating Activities are ____________.
Option 1: Rs 6,36,000
Option 2: Rs 6,66,000
Option 3: Rs 6,96,000
Option 4: Rs 6,86,000
Correct Answer: Rs 6,86,000
Solution : Answer = Rs 6,86,000
| Provision for tax a/c | |||
| To Cash(paid) | 1,000 | By Bal b/d | 15,000 |
| To bal c/d | 20,000 | By tax provided | 15,000 |
| 30,000 | 30,000 | ||
| N.P After charging Tax and Extraordinary items | 6,10,000 |
| (+) Tax charged | 15,000 |
| (-) Insurance claim received | (50,000) |
| NP Before tax and Extraordinary items | 5,75,000 |
| Cash flow from operating activities | |
| NP before tax | 5,75,000 |
| (+) Dep | 55,000 |
| (-) Profit on sale of fixed asset | (20,000) |
| op. Profit Before the Change in Working Capital | 6,10,000 |
| (+)Decrease in CA/ Increase in CL | |
| Inventories=10,000 | |
| Tax payable=30,000 | 40,000 |
| (-)Increase in CA/ Decrease in CL(Prepaid expenses) | (14,000) |
| (+)Insurance claim received | 50,000 |
| Operating profit before a change in working capital | 6,86,000 |
Hence, the correct option is 4.
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