Question

Following are the Balance Sheets of Krish Tech Ltd. for the year ended 31st March, 2012 and 2013 (Revised).
$\begin{array}{ccccc}\text{Particulars}& & \text{Note}& \text{Amount (Rs)}& \text{Amount (Rs)}\\ & & \text{No.}& 2012-13& 2011-12\\ \text{1. Equity and Liabilities}& & & & \\ \text{(1) Shareholders' Funds}& & & & \\ \text{(a) Share Capital}& & & 12,00,000& 8,00,000\\ \text{(b) Reserves and Surplus (Profit}\&\text{Loss Balance)}& & & 3,50,000& 4,00,000\\ \text{(2) Non-current liabilities}& & & & \\ \text{Long term borrowings}& & & 4,40,000& 3,50,000\\ \text{(3) Current liability : Trade Payables}& & & 60,000& 50,000\\ & \text{Total}& & 20,50,000& 16,00,000\\ \text{II. Assets}& & & & \\ \text{(1) Non-current Assets}& & & & \\ \text{(a) Fixed Assets}& & & & \\ \text{(i) Tangible Assets}& & & 12,00,000& 9,00,000\\ \text{(2) Current Assets}& & & & \\ \text{(a) Inventories}& & & 2,00,000& 1,00,000\\ \text{(b) Trade Receivables}& & & 3,10,000& 2,30,000\\ \text{(c) Cash and cash equivalents}& & & 3,40,000& 3,70,000\\ & \text{Total}& & 20,50,000& 16,00,000\end{array}$

Prepare a Cash Flow Statement after taking into account the following adjustments.

(a) The company paid interest Rs 36,000 on its long-term borrowing.

(b) Depreciation charged on tangible fixed assets was Rs 1,20,000.

Answer 1

CASH FLOW STATEMENT OF KRISH TECH. LTD.
for the year ended 31st March, 2012
$\begin{array}{ccc}\text{Particulars}& \text{Amount}& \text{Amount}\\ & \text{(Rs)}& \text{(Rs)}\\ \text{A. Cash Flow from Operating Activities}& & \\ \text{Net Loss before Tax (3,50,000 - 4,00,000)}& (50,000)& \\ \text{Adjustment for non-cash and non-operating items}& & \\ \text{Depreciation on Tangible Fixed Assets}& 1,20,000& \\ \text{Interest on long term borrowings}& 36,000& \\ \text{Operating profit before working capital changes}& 1,06,000& \\ \text{Adjustment for change in current assets and current liabilites}& & \\ \text{Less : Increase in Inventories (2,00,000 - 1,00,000)}& (1,00,000)& \\ \text{Less : Increase in Trade Receivable (3,10,000 - 2,30,000)}& (80,000)& \\ \text{Add : Increase in Trade Payable (60,000 - 50,000)}& 10,000& \\ \text{Net Cash used in Operating Activites (A)}& & (64,000)\\ \text{B. Cash Flow from Investing Activities}& & \\ \text{Purchase of Fixed Assets (WN)}& (4,20,000)& \\ \text{Net Cash used in Investing Activities (B)}& & (4,20,000)\\ \text{C. Cash Flow from Financing Activities}& & \\ \text{Issue of Share Capital (12,00,000 - 8,00,000)}& 4,00,000& \\ \text{Long-term Borrowings (4,40,000 - 3,50,000)}& 90,000& \\ \text{Interest Paid}& (36,500)& \\ \text{Cash Flow from Financing Activities (C)}& & 4,54,000\\ \text{D. Net decrease in cash and cash equivalents (A + B + C)}& & (30,000)\\ \text{E. Opening Balance of cash and cash equivalents.}& & 3,70,000\\ \text{F. Closing Balance of cash and cash equivalents}& & 3,40,000\end{array}$

Working Notes :

$\begin{array}{cccc}\text{Dr}& \text{FIXED ASSETS (TANGIBLE) ACCOUNT ACCOUNT}& & \text{Cr}\end{array}\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{Rs}& & \text{Rs}\\ \text{To Balance b/d}& 9,00,000& \text{By Depreciation A/c}& 1,20,000\\ \text{To Bank A/c (Purchase) (Balance Fig)}& 4,20,000& \text{By Balance c/d}& 12,00,000\\ & \overline{13,20,000}& & \overline{13,20,000}\end{array}$