Question

From the following Balance Sheet of Tiger Super Steel Ltd, prepare a cash flow statement.
Balance Sheet
$\begin{array}{cccccc}\text{Capital and Liabilities}& 2010\text{(Rs.)}& 2011\text{(Rs.)}& \text{Assets}& 2010\text{(Rs.)}& 2011\text{(Rs)}\\ \text{Equity Share Capital}& 80,000& 1,20,000& \text{Goodwill}& 24,000& 18,800\\ 10\%\text{Preference Share Capital}& 40,000& 20,000& \text{Land and Building}& 40,000& 20,000\\ \text{General Reserve}& 8,000& 12,000& \text{Plant}& 36,000& 76,400\\ \text{Profit and Loss Account}& 7,200& 10,800& \text{Investment}& 4,000& 14,000\\ \text{Proposed Dividend}& 11,200& 15,600& \text{Debtors}& 30,000& 43,200\\ \text{Bills Payable}& 14,000& 21,200& \text{Stock}& 34,000& 31,200\\ \text{Outstanding Expenses}& 3,200& 2,400& \text{Cash}& 6,800& 11,200\\ \text{Provision for Taxation}& 11,200& 12,800& & & \\ & \underset{–}{\overline{1,74,800}}& \underset{–}{\overline{2,14,800}}& & \underset{–}{\overline{1,74,800}}& \underset{–}{\overline{2,14,800}}\end{array}$

Additional Information:
Depreciation charged on land and building Rs. 20,000 and plant Rs. 10,000 during the year.

Answer 1

Cash Flow Statement of Tiger Super Steels Ltd.
$\begin{array}{cccc}& \text{Particulars}& \text{Amt. (Rs.)}& \text{Amt. (Rs.)}\\ A.& \text{Cash Flow from Operating Activities}& & \\ & \text{Profit as per the Balance Sheet (10,800 - 7,200)}& 3,600& \\ & \text{General Reserve}& 4,000& \\ & \text{Proposed Dividend}& 15,600& \\ & \text{Provision for Taxation}& \underset{–}{12,800}& \\ & \text{Net profit before Taxation and Extraodinary Items}& & 36,000\\ & \text{Adjustment of non-cash items:}& & \\ & \text{Depreciation on Land and Building}& 20,000& \\ & \text{Depreciation on Plant}& 10,000& \\ & \text{Goodwill Written-off}& \underset{–}{5,200}& \underset{–}{35,200}\\ & \text{Operating Profit before Working Capital Changes}& & 71,200\\ & \text{Changes in Working Capital:}& & \\ & \text{(+) Increase in Bills Payable}& 7,200& \\ & \text{(+) Decrease in Stock}& 2,800& \\ & \text{(-) Increase in Debtors}& (13,200)& \\ & \text{(-) Decrease in Outstanding Expenses}& \underset{–}{\left(800\right)}& \underset{–}{(4,000)}\\ & \text{Cash Generated from Operating Activities}& & 67,200\\ & \text{(-) Income Tax paid}& & \underset{–}{(11,200)}\\ & \text{Net Cash from Operating Activities (A)}& & \underset{–}{56,000}\\ B.& \text{Cash Flow from Investing Activities}& & \\ & \text{Purchase of Plant}& & (50,400)\\ & \text{Purchase of Investment}& & \underset{–}{(10,000)}\\ & \text{Net Cash from Investing Activities (B)}& & \underset{–}{(60,400)}\\ C.& \text{Cash Flow from Financing Activities}& & \\ & \text{Issue of Equity Shares}& & 40,000\\ & \text{Dividend Paid}& & (11,200)\\ & \text{Redemption of 10}\%\text{Preference Shares}& & \underset{–}{(20,000)}\\ & \text{Net Cash from Financing Activities (C)}& & \underset{–}{8,800}\\ D.& \text{Net Increase in Cash and Cash Equivalent}& & 4,400\\ & \text{(+) Cash and Cash Equivalents in the Beginning}& & \text{6,800}\\ E.& \text{Cash and Cash Equivalents at the End}& & \underset{–}{\overline{11,200}}\end{array}$

Dr. Plant Account Cr.
$\begin{array}{cccccccc}\text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs.)}& \text{Date}& \text{Particulars}& \text{J.F.}& \text{Amt. (Rs.)}\\ & \text{Balance b/d}& & 36,000& & \text{Depreciation A/c}& & 10,000\\ & \text{Bank A/c (Purchase)}& & 50,400& & \text{Balance c/d}& & 76,400\\ & \text{(Balancing Figure)}& & & & & & \\ & & & \underset{–}{\underset{–}{\overline{86,400}}}& & & & \underset{–}{\underset{–}{\overline{86,400}}}\end{array}$