While preparing Cash Flow’ Statement of Sharda Ltd. ‘Depreciation provided on fixed assets’ was added to net profit to calculate cash flow from operating activities. Was the accountant correct in doing so? Give reason. Post category:Accountancy Reading time:1 mins read SOLUTION Yes, accountant is correct.Reason: Depreciation is non-cash item. Please Share This Share this content Opens in a new window Twitter Opens in a new window Facebook Opens in a new window Google+ Opens in a new window Pinterest Opens in a new window LinkedIn Opens in a new window Viber Opens in a new window VK Opens in a new window Reddit Opens in a new window Tumblr Opens in a new window Viadeo Opens in a new window WhatsApp Read more articles Previous PostState with reason whether the issue of 9% debentures to a vendor for the purchase of machinery of Rs. 50,000 will result in inflow, outflow or no flow’ of cash while preparing Cash Flow Statement. Next PostWhile preparing Cash Flow Statement, the accountant of ‘Rachna Ltd.’, a financing company, included ‘Interest received on loan’ in financing activities. Was he correct in doing so? Give reason. You Might Also Like Pass necessary Journal entries to record the following unrecorded assets and liabilities in the books of Paras and Priya: (a) There was an old furniture in the firm which had been written off completely in the books. This was sold for Rs. 3,000. (b) Ashish, an old customer whose account for Rs. 1,000 was written off as bad in the previous year, paid 60%, of the amount. (c) Paras agreed to takeover the firm’s goodwill (not recorded in the books of the firm), at a valuation of Rs. 30,000. (d) There was an old typewriter which had been written off completely from the books. It was estimated to realise Rs. 400. It was taken by Priya at an estimated price less 25%. (e) There were 100 shares of Rs. 10 each in Star Limited acquired at a cost of Rs. 2,000 which had been written-off completely from the books. These shares are valued @ Rs. 6 each and divided among the partners in their profit-sharing ratio. July 25, 2022 Bharat Ltd. invited applications for issuing 2,00,000 Equity Shares of Rs. 10 each. The amount was payable as: On application Rs. 3 per share, on allotment Rs. 5 per share and on first and final call Rs. 2 per share. Applications for 3,00,000 shares were received and pro rata allotment was made to all the applicants on the following basis: Applicants for 2,00,000 shares were allotted 1,50,000 shares on pro rata basis. Applicants for 1,00,000 shares were allotted 50,000 shares on pro rata basis. Bajaj, who was allotted 3,000 shares out of group applying for 2,00,000 shares failed to pay the allotment money. His shares were forfeited immediately after allotment. Sharma, who had applied for 2,000 shares out of the group applying for 1,00,000 shares failed to pay the first and final call. His shares were also forfeited. Out of the forfeited shares 3,500 shares were reissued as fully paid-up @ Rs. 8 per share. The reissued shares included all the forfeited shares of Bajaj. Give necessary journal entries to record the above transactions. July 15, 2022 Pass necessary Journal entries for the issue of debentures in the following cases: (a) Rs. 40,000; 12% Debentures of Rs. 100 each issued at a premium of 5% redeemable at par. (b) Rs. 70,000; 12% Debentures of Rs. 100 each issued at a premium of 5% redeemable at Rs. 110. July 18, 2022 Leave a Reply Cancel replyYou must be logged in to post a comment.