Question

From the following information, Calculate:
(i) Cash Flows from Investing Activities, and
(ii) Cash Flows from Financing Activities.
$$\begin{array}{ccc}& \text{31st March,}& \text{31st March,}\\ \text{Particulars}& 2018& 2017\\ & \text{Rs.}& \text{Rs.}\\ \text{Plant and Machinery}& 6,80,000& 5,60,000\\ \text{Accumulated Depreciation on Plant and Machinery}& 1,70,000& 1,48,000\\ \text{Equity Share Capital}& 12,00,000& 10,00,000\\ \text{Loan from Bank}& 2,00,000& 1,50,000\end{array}$$
Additional Information:

(i) During the year a machine costing Rs. 1,20,000 was sold at a profit of Rs. 15,000. Depreciation on Plant and Machinery charged during the year amounted to Rs. 50,000.
(ii) Interest paid on Bank Loan amounted to Rs. 30,000
(iii) Dividend paid Rs. 80,000

Answer 1

Cash Flows From Investing Activiteis
$$\begin{array}{cc}\text{Particulars}& \text{Amount}\\ \text{Sale of Machinery (Working Note 3)}& 1,07,000\\ \text{Purchase of Machinery}& \underset{–}{(2,40,000)}\\ \text{Net Cash used in Investing Activities}& \underset{–}{(1,33,000)}\end{array}$$
Cash Flow From Financing Activities

$$\begin{array}{cc}\text{Particulars}& \text{Amount}\\ \text{Proceeds from Issue of Equity Share Capital}& 2,00,000\\ \text{Proceeds from Bank Loan}& 50,000\\ \text{Interest Paid on Bank Loan}& (30,000)\\ \text{Dividend Paid}& \underset{–}{(80,000)}\\ \text{Net Cash Flows from Financing Activities}& \underset{–}{1,40,000}\end{array}$$
Working Notes :
(1)
Dr. Accumulated Depreciation Account Cr.
$$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ \text{Plant and Machinery A/c}& & \text{Balance b/d}& 1,48,000\\ \text{(Balancing figure)}& 28,000& \text{Depreciation A/c}& 50,000\\ \text{Balance c/d}& \underset{–}{1,70,000}& & \underset{–}{}\\ & \underset{–}{1,98,000}& & \underset{–}{1,98,000}\end{array}$$
(2)
Dr. Plant and Machinery Account Cr.
$$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ \text{Balance b/d}& 5,60,000& \text{Bank A/c}& \\ \text{Profit on Sale of Machinery}& 15,000& \text{(Working Note 3)}& 1,07,000\\ \text{Bank A/c}& & \text{Accumulated Dep. A/c}& \\ \text{(Balancing Figure)}& 2,40,000& \text{(Accumulated Dep. on Machinery Sold)}& 28,000\\ & & \text{Balance c/d}& 6,80,000\\ & \underset{–}{\overline{8,15,000}}& & \underset{–}{\overline{8,15,000}}\end{array}$$
(3)
Sale price of machinery
= Cost of Machinery - Accumulated Dep. + Profit on sale
= Rs. 1,20,000 - Rs. 28,000 + Rs. 15,000
= Rs. 1,07,000