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P.5.5 Prepare a statement from the following financial information of ABC company, to explain the causes of increase in cash despite the firm incurring losses.

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P.5.5 Prepare a statement from the following financial information of ABC company, to explain the causes of increase in cash despite the firm incurring losses. (Amount in lakh) Income statement Sales *600.0 Dividends from investment in another company 3.6 603.6 Expenses Cost of goods sold 2400 Depreciation 50 Other operating expenditure 175 Interest 1.6 Loss on sale of plant (sale value, 27.2) 3.0 629.6 Net loss (26) (Amount in lakh) Retained earnings Beginning balance 250 Net loss (26) Dividends (16) Ending balance 8 (Amount in lakh) Position statement Previous year Current year Cash 19.2 343.2 Sundry debtors 28.6 16.8 Inventory 33.0 22.0 Prepayments 2.2 1.8 Investments 18.0 18.0 Land 15.0 15.0 Plant and machinery 119.8 110.4 Accumulated depreciation (75.2) (78.4) Total assets 160.6 148.8 Accounts payable 18.2 10.2 (Contd.) y7 (Conta.) Accrued liabilities Dividends payable Debentures Equity capital Preference share capital Retained earnings Total liabilities 1.2 1.2 12.0 50.0 28.0 50.0 160.6 2.4 2.2 16.0 60.0 50.0 8.0 148.8

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