To find cash flow from investing activities, we need to determine the cash paid for purchase of machinery and cash received from sale of machinery.
Finding Purchase of Machinery:
Using the Machinery Account relationship:
Opening Balance + Purchases - Cost of Machine Sold = Closing Balance
50,000 + Purchases - 25,000 = 60,000
Purchases = 60,000 - 50,000 + 25,000 = Rs. 35,000
We can verify this is correct by checking the Accumulated Depreciation account:
Opening Accumulated Depreciation - Accumulated Depreciation on Sold Machine + Depreciation for the year = Closing Accumulated Depreciation
25,000 - 15,000 + Depreciation = 15,000
Depreciation for the year = Rs. 5,000 ✓
Cash Flow from Investing Activities:
Cash Inflow from sale of machinery = Rs. 13,000
Cash Outflow for purchase of machinery = Rs. 35,000
Net Cash Flow = 13,000 - 35,000 = Rs. 22,000 (Outflow)
Since outflow exceeds inflow, there is a net cash outflow of Rs. 22,000 from investing activities.