Question

Following is the Balance Sheet of Mevanca Limited as at 31st March, 2017:

Mevanca Limited BALANCE SHEET
as at 31st March, 2017:

Particulars	Note No.	31st March, 2017 (₹)	31st March, 2016 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital		3,00,000	1,00,000
(b) Reserves and Surplus	1	25,000	1,20,000
2. Non-Current Liabilities
Long-term Borrowings	2	80,000	60,000
3. Current Liabilities
(a) Trade Payables		6,000	20,000
(b) Short-term Provisions	3	68,000	70,000
Total		4,79,000	3,70,000
II. ASSETS
1. Non-Current Assets
Fixed Assets	4	3,36,000	1,92,000
2. Current Assets
(a) Inventories		67,000	60,000
(b) Trade Receivables		51,000	65,000
(c) Cash and Cash Equivalents		25,000	49,000
(d) Other Current Assets		…	4,000
Total		4,79,000	3,70,000

Notes to Accounts

Particulars	31st March, 2017 (₹)	31st March, 2016 (₹)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss	25,000	1,20,000
	25,000	1,20,000
2. Long-term Borrowings
10% Long-term Loan	80,000	60,000
	80,000	60,000
3. Short-term Provisions
Provision for Tax	68,000	70,000
	68,000	70,000
4. Fixed Assets
Machinery	3,84,000	2,15,000
Accumulated Depreciation	(48,000)	(23,000)
	3,36,000	1,92,000

Additional Information:
(i) Additional loan was taken on 1st July, 2016.
(ii) Tax of ₹ 53,000 was paid during the year.
Prepare Cash Flow Statement.

Answer 1

Cash flow Statement
for the year ended 31st March, 2017
Particulars	Amount (₹)	Amount (₹)
A. Cash Flow from Operating Activities
Net Loss as per Statement of Profit and Loss	(95,000)
Add: Provision for Tax made (WN1)	51,000
Net loss before Tax and Extraordinary Items	(44,000)
Add: Depreciation charged during the year	25,000
Interest paid on loan (WN2)	7,500
Net Loss before Working Capital Changes	(11,500)
Add: Decrease in Trade Receivables	14,000
Decrease in other Current Assets	4,000
Less: Decrease in Trade Payables	(14,000)
Increase In Inventories	(7,000)
Net Loss before Tax	(14,500)
Add: Tax to be paid during the year	(53,000)
Cash used in Operating Activities		(67,500)
B. Cash Flow from Investing Activities
Purchase of Machinery	(1,69,000)
Cash used in Investing Activities		(1,69,000)
C. Cash Flow from Financing Activities
Proceeds from Issue of Shares	2,00,000
Proceeds from additional loan taken	20,000
Interest paid on long-term loan	(7,500)
Cash flow from Financing Activities		2,12,500
Net decrease in Cash and Cash Equivalents		(24,000)
Add: Opening Balance of Cash and Cash Equivalent		49,000
Cash and Cash Equivalents at the end of the year		25,000

Working Notes:

1.

Dr.	Provision for Tax A/c					Cr.
Date		Particulars	Amount (₹)	Date	Particulars		Amount (₹)
2017				2016
March 31		To Cash A/c- Tax Paid	53,000	April 01	By balance b/d		70,000
March 31		To balance c/d	68,000	2017
				March 31	By Statement of Profit & Loss A/c		51,000
			1,21,000				1,21,000

2. Interest on Loan
$$\begin{gathered} \mathrm{Interest}\mathrm{on}\mathrm{Loan}\mathrm{taken}\mathrm{on}1\mathrm{st}\mathrm{July},2016=₹\left(20,000\times \frac{10}{100}\times \frac{9}{12}\right)=₹1,500 \\ \mathrm{Interest}\mathrm{on}\mathrm{Loan}\mathrm{as}\mathrm{on}31\mathrm{st}\mathrm{March},2016=₹\left(60,000\times \frac{10}{100}\right)=₹6,000 \\ \mathrm{Total}\mathrm{Interest}\mathrm{Paid}\mathrm{on}\mathrm{Loan}=₹(6,000+1,500)=₹7,500 \end{gathered}$$