Question

From the following Balance Sheet of Akash Ltd. as at 31st March 2014:

Particulars	Note No.	31st March, 2014 (₹)	31 March, 2013 (₹)
I. EQUITY AND LIABILITES 1. Shareholders' Funds
(a) Share Capital		15,00,000	14,00,000
(b) Reserves and Surplus	1	2,50,000	1,10,000
2. Non-Current Liabilities
Long-term Borrowings		2,00,000	1,25,000
3. Current Liabilities
(a) Short-term Borrowings	2	12,000	10,000
(b) Trade Payables		15,000	83,000
(c) Short-term Provisions	3	18,000	11,000
Total		19,95,000	17,39,000
II. ASSETS
1. Non-Current Assets
Fixed Assets:
(i) Tangible Assets	4	18,60,000	16,10,000
(ii) Intangible Assets	5	50,000	30,000
2. Current Assets
(a) Current Investments		8,000	5,000
(b) Inventories		37,000	59,000
(c) Trade Receivables		26,000	23,000
(d) Cash and Cash Equivalents		14,000	12,000
Total		19,95,000	17,39,000

Notes to Accounts :
Particulars	31st March, 2014 (₹)	31st March, 2013 (₹)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit and Loss	2,50,000	1,10,000
2. Short-term Borrowings :
Bank Overdraft	12,000	10,000
3. Short-term Provisions
Provision for Tax	18,000	11,000
4. Tangible Assets :
Machinery	20,00,000	17,00,000
Less: Accumulated Depreciation	(1,40,000)	(90,000)
	18,60,000	16,10,000
5. Intangible Assets
Patents	50,000	30,000

Additional Information :

(i) Tax paid during the year amounted to ₹ 16,000.
(ii) machine with a net book value of ₹ 10,000 (Accumulated Depreciation ₹ 40,000) was sold for ₹ 2,000.

Prepare Cash Flow Statement.

Answer 1

		Cash Flow Statement for the year ended March 31, 2014
	Particulars			Amount (Rs)	Amount (Rs)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss			1,40,000
	Provision for Tax			23,000
	Profit Before Taxation				1,63,000
	Items to be Added:
	Depreciation			90,000
	Loss on Sale of Fixed Assets			8,000	98,000
	Operating Profit before Working Capital Adjustments				2,61,000
	Less: Increase in Current Assets
			Trade Receivables	(3,000)
	Less: Decrease in Current Liabilities
	Trade Payables			(68,000)
	Add: Decrease in Current Assets
	Inventory			22,000	(49,000)
	Cash Generated from Operations				2,12,000
	Less: Tax Paid				(16,000)
	Net Cash Flows from Operating Activities				1,96,000
B	Cash Flow from Investing Activities
			Sale of Fixed Assets	2,000
			Purchase of Patents	(20,000)
			Purchase of Fixed Assets	(3,50,000)
	Net Cash Used in Investing Activities				(3,68,000)
C	Cash Flow from Financing Activities
	Proceeds from Issue of Share Capital			1,00,000
	Proceeds from Long term Borrowings			75,000
	Raise of Bank Overdraft			2,000
	Net Cash Flow from Financing Activities				1,77,000
D	Net Increase in Cash and Cash Equivalents				5,000
	Add: Cash and Cash Equivalent in the beginning of the period (12,000+5,000)				17,000
	Cash and Cash Equivalents at the end of the period (14,000+8,000)				22,000

Working Notes:

WN1:

Fixed Assets Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Balance b/d	17,00,000	Bank A/c (Sale)	2,000
Bank A/c (Purchase- Bal. Fig.)	3,50,000	Accumulated Depreciation	40,000
		Profit and Loss A/c (Loss on Sale)	8,000
		Balance c/d	20,00,000
	20,50,000		20,50,000

WN2:

Accumulated Depreciation Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Fixed Assets A/c	40,000	Balance b/d	90,000
Balance c/d	1,40,000	Profit and Loss A/c (Dep. charged during the year- Bal. Fig.)	90,000
	1,80,000		1,80,000

WN3:

Provision for Taxation Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Bank A/c (Tax Paid)	16,000	Balance b/d	11,000
Balance c/d	18,000	Profit and Loss A/c (Bal. Fig.)	23,000
	34,000		34,000