Question

Following is the Financial Statement of Garima Ltd., prepare cash flow statement.

Particulars	Note No.	31st March 2017 (Rs)	31st March 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	4,40,000	2,80,000
b) Reserve and surplus-Surplus	2	40,000	28,000
2. Current Liabilities
a) Trade payables		1,56,000	56,000
c) Short-term provisions		12,000	4,000
(Provision for taxation)
Total		6,48,000	3,68,000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		3,64,000	2,00,000
2. Current assets
a) Inventories		1,60,000	60,000
b) Trade receivables		80,000	20,000
c) Cash and cash equivalents		28,000	80,000
d) Other current assets		16,000	8,000
Total		6,48,000	3,68,000

Notes to Accounts

Particulars	31st March 2017 (Rs)	31st March 2016 (Rs)
1. Share capital
a) Equity share capital	3,00,000	2,00,000
b) Preference share capital	1,40,000	80,000
	4,40,000	2,80,000
2. Reserve and surplus
Surplus in statement of profit and loss at the beginning of the year	28,000
Add: Profit of the year	16,000
Less: Dividend	4,000
Profit at the end of the year	40,000

Additional Information:

1. Interest paid on Debenture Rs 600
2. Dividend paid during the year Rs 4,000
3. Depreciation charged during the year Rs 32,000

Answer 1

Cash Flow Statement (Indirect Method)
	Particulars			Amount Rs	Amount Rs
A.	Cash Flow from Operating Activities
	Profit as per Balance Sheet (40,000 – 28,000)			12,000
	Proposed Dividend			4,000
	Provision for Taxation			12,000
	Net Profit before Taxation and Extraordinary items				28,000
	Items to be added:
	Interest paid on Debentures			600
	Depreciation			32,000	32,600
	Operating Profit before Working Capital changes				60,600
	Add: Increase in Current liabilities
	Trade Payables			1,00,000
	Less: Increase in Current Assets
	Other Current Assets			(8,000)
	Inventories			(1,00,000)
	Trade Receivables			(60,000)	(68,000)
	Cash generated from Operating Activities				(7,400)
	Less: Income Tax paid				(4,000)
	Net Cash used in Operating Activities				(11,400)
B.	Cash Flow from Investing Activities
	Purchase of Fixed Assets				(1,96,000)
	Net Cash used in Investing Activities				(1,96,000)
C.	Cash Flow from Investing Activities
	Issue of Equity Shares				1,00,000
	Issue of Preference Shares				60,000
	Less: Interest Paid on Debentures				(600)
	Less: Dividend Paid				(4,000)
	Net Cash from Financing Activities				1,55,400
D.	Net decrease in cash and cash equivalent (A+B+C)				(52,000)
	Add: Cash and Cash Equivalents in the beginning				80,000
E.	Cash and Cash Equivalents at the end				28,000

Working Notes:

Plant and Machinery Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
	Balance b/d		2,00,000		Depreciation		32,000
	Bank (Purchases- Balancing fig.)		1,96,000		Balance c/d		3,64,000
			3,96,000				3,96,000