Question

Following is the Balance Sheet of Computer India Ltd.

Balance Sheet
$\begin{array}{cccccc}\text{Capital and Liabilities}& \text{2010 (Rs.)}& \text{2011 (Rs.)}& \text{Assets}& \text{2010 (Rs.)}& \text{2011 (Rs.)}\\ \text{Equity Share Capital}& \text{40,000}& \text{50,000}& \text{Fixed Assets}& \text{41,000}& \text{40,000}\\ \text{Profit and Loss Account}& \text{1,000}& \text{1,200}& \text{(-)Provision for Depreciation}& \underset{–}{11,000}& \underset{–}{15,000}\\ \text{General Reserve}& \text{2,000}& \text{2,500}& & \text{30,000}& \text{25,000}\\ \text{10 \% Debemtures}& \text{6,000}& \text{6,500}& \text{Debtors}& \text{20,000}& \text{24,000}\\ \text{Sundry Creditors}& \text{12,000}& \text{11,000}& \text{Stock}& \text{30,000}& \text{35,000}\\ \text{Provision for Taxation}& \text{3,000}& \text{4,200}& \text{Prepaid Expenses}& \text{300}& \text{500}\\ \text{Proposed Dividend}& \text{5,000}& \text{5,800}& \text{Cash}& \text{1,200}& \text{3,500}\\ \text{Bank Overdraft}& \text{12,500}& \text{6,800}& & & \\ & \overline{\underset{–}{81,500}}& \overline{\underset{–}{88,000}}& & \overline{\underset{–}{81,500}}& \overline{\underset{–}{88,000}}\end{array}$

Additional Information:
Interest paid on debenture Rs. 600.

Answer 1

Cash Flow Statement
$\begin{array}{cccc}& \text{Particulars}& \text{Amt. (Rs)}& \text{Amt. (Rs)}\\ \text{A.}& \text{Cash Flow from Operating Activities}& & \\ & \text{Profit as per Balance Sheet (1,200 - 1,000)}& 200& \\ & \text{Proposed Dividend}& 5,800& \\ & \text{General Reserve}& 500& \\ & \text{Provision for Taxation}& \underset{–}{4,200}& \\ & \text{Net Profit before Tax and Extraordinary Itams}& & \overline{\text{10,700}}\\ & \text{Adjustment for non-cash items:}& & \\ & \text{Provision for Depreciation}& & \text{4,000}\\ & & & \overline{\text{14,700}}\\ & \text{Adjustment for non-operating items:}& & \\ & \text{Interest Paid on Debentures}& & \underset{–}{\text{600}}\\ & \text{Operation Profit before Working Capital Changes}& & 15,300\\ & \text{Changes in Working Capital:}& & \\ & (-)\text{Increase in Debtors}& (4,000)& \\ & (-)\text{Increase in Stock}& (5,000)& \\ & (-)\text{Increase in Prepaid Expenses}& \text{(200)}& \\ & (-)\text{Decrease in Creditors}& \underset{–}{(1,000)}& \underset{–}{\text{(10,200)}}\\ & \text{Cash Generated from Operating Activities}& & 5,100\\ & (-)\text{Income Tax Paid}& & \underset{–}{(3,000)}\\ & \text{Net Cash from Operation}& & \underset{–}{2,100}\\ \text{B.}& \text{Cash Flow from Investing Activities}& & \\ & \text{Sale of Fixed Assets}& & \underset{–}{1,000}\\ & \text{Net Cash from Investing Activities}& & \underset{–}{1,000}\\ \text{C.}& \text{Cash Flow from Financing Activities}& & \\ & \text{Issue of Equity Shares}& & 10,000\\ & \text{Issue of 10 \% Debentures}& & 500\\ & (-)\text{Dividend Paid}& & (5,000)\\ & (-)\text{Interest Paid}& & \underset{–}{\left(600\right)}\\ & \text{Net Cash from Financing Activities}& & \underset{–}{4,900}\\ \text{D.}& \text{Net Increase in Cash and Cash Equivalents (A + B + C)}& & 8,000\\ & \text{(+) Cash and Cash equivalents in the beginning}& & \\ & \text{Cash}& \text{1,200}& \\ & \text{Bank Overdraft}& \underset{–}{(12,500)}& \underset{–}{\text{(11,300)}}\\ \text{E}& \text{Cash and Cash Equivalents at the end}& & \\ & \text{Cash}& \text{3,500}& \\ & \text{Bank Overdraft}& \underset{–}{(6,800)}& \underset{–}{(3,300)}\end{array}$