Question

Following is the Balance Sheet of Wisben Led , as on 31st March, 2012.

$$\begin{array}{cccc}\text{Particulars}& \text{Notes to}& \text{Current Year}& \text{Previous Year}\\ & & \text{(Rs)}& \text{(Rs)}\\ \text{1. Equity and Liabilities :}& & & \\ \text{(1) Shareholders' Funds}& & & \\ \text{(a) Share Capital}& & 7,00,000& 6,00,000\\ \text{(b) Reserve and Surplus (Profit and Loss Balance)}& & 2,00,000& 1,10,000\\ \text{(2) Non-current Liabilities}& & & \\ \text{Long-term Borrowings}& & 3,00,000& 2,00,000\\ \text{(3) Current Liabilities}& & & \\ \text{Trade Payables}& & 30,000& 25,000\\ \text{Total}& & 12,30,000& 9,35,000\\ \text{II. Assets :}& & & \\ \text{(1)Non-current Assets}& & 11,00,000& 8,00,000\\ \text{(a) Fixed Asset : Tangible Assets}& & & \\ \text{(2) Current Assets}& & & \\ \text{(a)Inventories}& & 70,000& 60,000\\ \text{(b) Trade Receivables}& & 32,000& 40,000\\ \text{CAsh and Cash Equivalents}& & 28,000& 35,000\\ \text{Total}& & 12,30,000& 9,35,000\end{array}$$

Adjustments : During the year a piece of machinery of the book value of Rs 80,000 was sold for Rs 65,000.Depreciation provided on tangible assets during the year amounted to Rs 2,00,000. Prepare a Cash Flow Statement.

Answer 1

CASH FLOW STATEMENT OF WISBEN LTD.
for the year ended 31st March, 2012
$\begin{array}{ccccc}\text{Particulars}& & \text{Amount}& \text{Amount}& \\ & & \text{(Rs)}& \text{(Rs)}& \\ \text{A. Cash Flow from Operating Activities}& & & & \\ \text{Net Profit before Tax (2,00,000-1,10,000)}& & 90,000& & \\ \text{Add : Non-cash and Non-operating items :}& & & & \\ \text{Depreciation}& 2,00,000& & & \\ \text{Loss on Sale of Machinery}& \underset{–}{15,000}& \underset{–}{2,15,000}& & \\ \text{Operatinog Profit before Working Capital Charges}& & 3,05,000& & \\ \text{Change in Current Assets and Current Liabilities :}& & & & \\ \text{Increase in Inventories}& (10,000)& & & \\ \text{Decrease in Trade Receivables}& 8,000& & & \\ \text{Increase in Trade Payables}& \underset{–}{5,000}& & 3,000& \\ \text{Net Cash from Operating Activities (A)}& & & 3,08,000& \\ \text{B. Cash Flow from Investing Activities}& & & & \\ \text{Purchase of Fixed Asset}& & (5,80,000)& & \\ \text{Sale of Machinery}& & 65,000& & \\ \text{Net Cash used in Investing Activities (B)}& & & (5,15,000)& \\ \text{C. Cash Flow from Financing Activities}& & & & \\ \text{Issue of Equity Shares}& & 1,00,000& & \\ \text{Long term Borrowings}& & 1,00,000& & \\ \text{Net Cash from Financing Activities (C)}& & & 2,00,000& \\ \text{D.Net Increase in CAsh and Cash Equivalents (A+B+C)}& & & \overline{(7,000)}& \\ \text{E. Add : Opening Balance of Cash and CAsh Equivalents}& & & 35,000& \\ \text{F. Closing Balance of Cash and Cash Equivalents}& & & \overline{28,000}& \end{array}$

FIXED ASSETS (TANGIBLE) ACCOUNT

$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{To Balance b/d}& 8,00,000& \text{By Bank (Sale)}& 65,000\\ \text{To Bank A/c (Purchase)}& & \text{By Statement of Profit and Loss}& \\ \text{(Balancing Figure)}& 5,80,000& \text{(Loss on Sale)}& 15,000\\ & & \text{By Depreciation A/c}& 2,00,000\\ & & \text{By Balance c/d}& 11,00,000\\ & \overline{13,80,000}& & \overline{13,80,000}\end{array}$