Question

From the following Balance Sheet of Samta Ltd., as at 31st March, 2019, prepare Cash Flow Statement:

Particulars ulars	Note No.	31st March, 2019 (₹)	31st March, 2018 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital	1	7,50,000	7,50,000
(b) Reserves and Surplus	2	3,10,000	(20,000)
2. Non-Current Liabilities
Long-term Borrowings (8% Debentures)		2,60,000	1,50,000
3. Current Liabilities
(a) Short-term Borrowings (8% Bank Loan)		40,000	50,000
(b) Trade Payables		1,20,000	1,10,000
(c) Short-term Provisions	3	50,000	40,000
Total Total Expenses		15,30,000	10,80,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets:
(i) Tangible Assets (Net)		8,60,000	6,20,000
(ii) Intangible Assets (Goodwill)		15,000	40,000
(b) Non-Current Investments		1,25,000	80,000
2. Current Assets
(a) Current Investments		5,000	15,000
(b) Inventories		1,95,000	1,00,000
(c) Trade Receivables		2,00,000	2,00,000
(d) Cash and Cash Equivalents		1,30,000	25,000
Total		15,30,000	10,80,000

Notes to Accounts

Particulars	31st March, 2019 (₹)	31st March, 2018 (₹)
1. Share Capital
Equity Share Capital	5,50,000	4,50,000
12% Preference Share Capital	2,00,000	3,00,000
	7,50,000	7,50,000
2. Reserves and Surplus
Securities Premium Reserve	10,000	...
General Reserve	1,50,000	1,20,000
Surplus, i.e., Balance in Statement of Profit and Loss	1,50,000	(1,40,000)
	3,10,000	(20,000)
4. Short-term Provisions
Provision for Tax	50,000	40,000

Additional Information :
(i) During the year a piece of machinery costing ₹ 60,000 on which depreciation charged was ₹ 20,000 was sold at 50% of its book value. Depreciation provided on tangible Assets ₹ 60,000;
(ii) Income tax ₹ 45,000 was provided;
(iii) Additional Debentures were issued at par on 1st October, 2018 and Bank Loan was repaid on the same date;
(iv) At the end of the year Preference Shares were redeemed at a premium of 5%.

Answer 1

		Cash Flow Statement for the year ended March 31, 2019
	Particulars			Amount (₹)	Amount (₹)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss [1,50,000 − (−1,40,000)]			2,90,000
	Provision for Tax			45,000
	General Reserve			30,000
	Profit Before Taxation				3,65,000
	Items to be Added:
	Depreciation on Fixed Assets			60,000
	Loss on Fixed Assets			20,000
	Interest on Debentures (6,000 + 10,400)			16,400
	Interest on Bank Loan (2,000 + 1,600)			3,600
	Premium on Redemption of Preference Shares			5,000
	Goodwill written off			25,000	1,30,000
	Operating Profit before Working Capital Adjustments				4,95,000
	Less: Increase in Current Assets
			Inventories	(95,000)
	Add: Increase in Current Liabilities
	Trade Payables			10,000	(85,000)
	Cash Generated from Operations				4,10,000
	Less: Tax Paid				(35,000)
	Net Cash Flows from Operating Activities				3,75,000
B	Cash Flow from Investing Activities
			Sale of Fixed Assets	20,000
			Purchase of Fixed Assets	(3,40,000)
			Purchase of Investment	(45,000)
	Net Cash Used in Investing Activities				(3,65,000)
C	Cash Flow from Financing Activities
	Proceeds from Issue of Share Capital			1,00,000
	Proceeds from Issue of Debentures			1,10,000
	Interest on Debentures Paid			(16,400)
	Redemption of Preference Share Capital			(1,00,000)
	Premium on Redemption of Preference Share Capital			(5,000)
	Security Premium Reserve			10,000
	Repayment of Bank Loan			(10,000)
	Interest on Bank Loan Paid			(3,600)
	Net Cash Flow from Financing Activities				85,000
D	Net Increase in Cash and Cash Equivalents				95,000
			Add: Cash and Cash Equivalent in the beginning of the period (25,000+15,000)		40,000
	Cash and Cash Equivalents at the end of the period (1,30,000+5,000)				1,35,000

Working Notes:

WN1:

Fixed Assets Account
Dr.		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	6,20,000	Bank A/c (Sale) (40,000$\times$50%)	20,000
Bank A/c (Purchase- Bal. Fig.)	3,40,000	Depreciation	60,000
		Profit and Loss A/c (Loss on Sale)	20,000
		Balance c/d	8,60,000
	9,60,000		9,60,000

WN2:

Provision for Taxation Account
Dr.		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Bank A/c (Tax Paid) (Bal. Fig.)	35,000	Balance b/d	40,000
Balance c/d	50,000	Profit and Loss A/c	45,000
	85,000		85,000