Question

From the following Balance Sheets of Zee Entertainment Ltd., prepare a Cash Flow Statement for the year ended 31st March, 2017.

BALANCE SHEET OF ZEE ENTERTAINMENT LTD.

as at 31st March, 2016 and 31st March, 2017

$\begin{array}{cccc}\text{Particulars}& \text{Note}& 31-03-2017& 31-03-2016\\ & \text{No.}& \left(\text{Rs}\right)& \left(\text{Rs}\right)\\ \text{I. EQUITY AND LIABILITIES}& & & \\ \text{(1) Shareholders Funds:}& & & \\ \text{(a) Share Capital (Equity)}& & 2,00,000& 2,00,000\\ \text{(b) Reserve and Surplus}& 1& 90,000& 50,000\\ \text{(2) Non-current Liabilities:}& & & \\ \text{Long-term Borrowings (Bank Loan)}& & -& 10,000\\ \text{(3) Current Liabilities:}& & & \\ \text{(a) Trade Payables (Creditors)}& & 20,000& 15,000\\ \text{(b) Other Current Liabilities}& 2& 5,000& 5,000\\ \text{(c) Short-term Provisions}& 3& 25,000& 20,000\\ \text{Total}& & 3,40,000& 3,00,000\\ \text{II. ASSETS}& & & \\ \text{(1) Non-current Assets:}& & & \\ \text{(a) Fixed Assets}& & 2,75,00& 2,35,000\\ \text{(2) Current Assets :}& & & \\ \text{(a) Inventories}& & 15,000& 25,000\\ \text{(b) Trade Receivables (Debtors)}& & 20,000& 10,000\\ \text{(c) Cash and Cash Equivalents}& 4& 30,000& 30,000\\ \text{Total}& & 3,40,000& 3,00,000\end{array}$

Notes to Accounts :

$\begin{array}{cccc}\text{Note}& \text{Particulars}& 31-03-2017& 31-03-2016\\ \text{No.}& & \left(\text{Rs}\right)& \left(\text{Rs}\right)\\ 1& \text{Reserves and Surplus:}& & \\ & \text{Statements of Profit and Loss:}& 90,000& 50,000\\ 2& \text{Other Current Liabilities:}& & \\ & \text{Outstanding Expenses}& 1,000& 5,000\\ & \text{Unaccrued Income}& 4,000& -\\ & & \overline{\underset{–}{5,000}}& \overline{\underset{–}{5,000}}\\ 3& \text{Short-term Provisions:}& & \\ & \text{Provision for Tax}& 25,000& 20,000\\ 4& \text{Cash and Cash Equivalents:}& & \\ & \text{Cash}& 10,000& 8,000\\ & \text{Bank}& 20,000& 22,000\\ & & \overline{\underset{–}{30,000}}& \overline{\underset{–}{30,000}}\end{array}$

Note : During the year the company declared equity dividend @ 10$\%$ and paid Rs 15,000 as income tax.

Depreciation charged during the year Rs 20,000.

Answer 1

CASH FLOW STATEMENTS

for the year ending 31st March, 2017

$\begin{array}{ccc}\text{Particulars}& \text{Amount}& \text{Amount}\\ & \left(\text{Rs}\right)& \left(\text{Rs}\right)\\ \text{A. Cash Flow from Operating Activities}& & \\ \text{Profit before tax}\left(\text{Note}1\right)& 80,000& \\ \text{Adjustment for non-cash and non-operating items:}& & \\ \text{+ Depreciation}& 20,000& \\ \text{Operating Profit before working capital changes}& 1,00,000& \\ \text{+ Increase in Creditors}& 5,000& \\ \text{Decrease in Stock}& 10,000& \\ \text{Increase in unaccrued Income}& 4,000& \\ \text{(-) Increase in Debtors}& (10,000)& \\ \text{Decrease in outstanding expenses}& (4,000)& \\ \text{Cash generated from Operating Activities}& 1,05,000& \\ \text{(-) Tax Paid}\left(Note2\right)& (15,000)& \\ \text{Net Cash from Operating Activities}\left(A\right)& & 90,000\\ \text{B. Cash Flow from Operating Activities}& & \\ \text{Purchase of Fixed Assets}\left(Note3\right)& (60,000)& \\ \text{Net Cash used in Investing Activities}\left(B\right)& & (60,000)\\ \text{C. Cash Flow from Financing Activities}& & \\ \text{Repayment of Bank Loan}& (10,000)& \\ \text{Dividend Paid}& (20,000)& \\ \text{Net Cash used in Financting Activities}\left(C\right)& & (30,000)\\ \text{Net increase/decrease in Cash and Cash Equivalents}(A+B+C)& & -\\ \text{+ Opening Cash and Cash Equivalents}& & \overline{\underset{–}{30,000}}\\ \text{Closing Cash and Cash Equivalents}& & 30,000\end{array}$

Working Notes :

$\begin{array}{cccc}& & & \text{(Rs)}\\ 1& \text{Profit before Tax}& & \\ & \text{Profit for the year (Rs 90,000 - Rs 50,000)}& & 40,000\\ & \text{Add : Provision for Tax (Note 2)}& & 20,000\\ & \text{Add : Proposed Dividend}& & 20,000\\ & & & 80,000\end{array}$

2. PROVISION FOR TAX ACCOUNT
$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{To Cash (Tax paid)}& 15,000& \text{By Balance b/d}& 20,000\\ \text{To Balance c/d}& 25,000& \text{By Profit and Loss A/c}& 20,000\\ \text{Total}& 40,000& \text{Total}& 40,000\end{array}$

3. FIXED ASSETS ACCOUNT
$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{To Balance b/d}& 2,35,000& \text{By Depreciation}& 20,000\\ \text{To Cash (Purchase) (Balancing Figure)}& 60,000& \text{By Balance c/d}& 2,75,000\\ \text{Total}& 2,95,000& \text{Total}& 2,95,000\end{array}$