Question

From the following Balance Sheets of Tiger Super Steel Ltd., prepare Cash Flow Statement:

Balance Sheet of Tiger Super Steel Ltd. as on 31 Mar. 2016 and 31 Mar. 2017

Particulars	Note No.	March 31, 2017 (Rs)	March 31, 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	1,30,000	2,00,000
b) Reserves and surplus	2	22,800	15,200
2. Current Liabilities
a) Trade payables	3	21,200	14,000
b) Other current liabilities	4	2,400	3,200
c) Short-term provisions	5	38,400	22,400
Total		2,14,800	1,74,800
II) Assets
1. Non-Current Assets
a) Fixed assets
i) Tangible assets	6	96,400	76,000
ii) Intangible assets		18,800	24,000
b) Non-current investments		14,000	4,000
2. Current assets
a) Inventories		31,200	34,000
b) Trade receivables		43,200	30,000
c) Cash and cash equivalents		11,200	6,800
Total		2,14,800	1,74,800

Notes to accounts:

	2017	2016
1. Share Capital
Equity share capital	1,20,000	80,000
10% Preference share capital	20,000	40,000
	1,40,000	1,20,000
2. Reserves and surplus
General reserve	12,000	8,000
Balance in statement of profit and loss	10,800	7,200
	22,800	15,200
3. Trade payables
Bills payable	21,200	14,000
4. Other current liabilities
Outstanding expenses	2,400	3,200
5. Short-term provisions
Provision for taxation	12,800	11,200
Proposed dividend	15,600	11,200
	28,400	22,400
6. Tangible assets
Land and building	20,000	40,000
Plant	76,400	36,000
	96,400	76,000

Answer 1

Cash Flow Statement of Tiger Super Steels Ltd
	Particulars			Amount Rs	Amount Rs
A.	Cash Flow from Operating Activities
	Profit as per the Balance Sheet (10,800 –7,200)			3,600
	General Reserve			4,000
	Proposed Dividend			15,600
	Provision for Taxation			12,800
	Net Profit before Taxation and Extraordinary				36,000
	Items to be added:
		Depreciation on Land and Building		20,000
		Depreciation on Plant		10,000
		Goodwill written off		5,200	35,200
	Operating Profit before Working Capital changes				71,200
		Add:	Increase in Current Liabilities
			Bills Payable	7,200
		Add:	Decrease in Current Assets
			Inventories	2,800	10,000
					81,200
		Less:	Increase in Current Assets
			Trade Receivables	(13,200)
		Less:	Decrease in Current Liabilities
			Outstanding Expenses	(800)	(14,000)
	Cash Generated from Operating Activities				67,200
		Less:	Income Tax paid		(11,200)
	Net Cash from Operating Activities				56,000
B.	Cash Flow from Investing Activities
		Purchases of Plant			(40,400)
		Purchases of Investment			(20,000)
	Net Cash used in Investing Activities				(60,400)
C.	Cash Flow from Financing Activities
		Issue of Equity Shares			40,000
		Dividend paid			(11,200)
		Redemption of 10% Preference Shares			(20,000)
	Net Cash from Financing Activities				8,800
D.	Net Increase in Cash and Cash Equivalent				4,400
		Add:	Cash and Cash Equivalent in the beginning		6,800
E.	Cash and Cash Equivalents at the end				11,200

Working Notes:

1.

Plant Account
Dr.							Cr.
Date	Particulars	J.F.	Amount Rs	Date	Particulars	J.F.	Amount Rs
	To Balance b/d		36,000		By Depreciation		10,000
	To Bank A/c (Purchases- Balancing figure)		50,400		By Balance c/d		76,400
			86,400				86,400

2.

Net Profit before Tax		3,600
Profit and Loss Account		12,800
Less:	Provision for Tax	16,400

Note: As per the solution, the Net Cash from Operating Activities, net Cash from Investing Activities and Net Cash from Financing Activities are Rs 56,000, Rs (60400) and Rs 8,800 respectively. However, as per the answer given in the book, the Net Cash from Operating Activities, net Cash from Investing Activities and Net Cash from Financing Activities are Rs 34,800, Rs (50,400) and Rs 20,000 respectively.