Question

Prepare a Cash Flow Statement from the following Balance Sheet (Revised) :

$\begin{array}{cccc}\text{Particulars}& \text{Note}& 31-03-2013& 31-03-2012\\ & \text{No.}& \text{Amount(Rs)}& \text{Amount(Rs)}\\ 1.\text{Equity and Liabilities}& & & \\ \left(1\right)\text{Shareholder's Funds :}& & & \\ \left(a\right)\text{Share Capital}& & 6,30,000& 5,60,000\\ \left(b\right)\text{Reserves and Surplus}& 1& 3,08,000& 1,82,000\\ \left(2\right)\text{Current Liabilities}& & & \\ \text{Trade Payables}& & 2,80,000& 1,82,000\\ \text{Total}& & 12,18,000& 9,24,000\\ \text{II. Assets}& & & \\ \left(1\right)\text{Non-current Assets}:& & & \\ \left(a\right)\text{Fixed Assets}:& & & \\ \text{Tangible Assets - Plant}& & 3,92,000& 2,80,000\\ \left(2\right)\text{Current Assets}:& & & \\ \left(a\right)\text{Inventories}& & 98,000& 1,40,000\\ \left(b\right)\text{Trade Receivables}& & 6,30,000& 4,20,000\\ \left(c\right)\text{Cash and Cash Equivalents}& & 98,000& 84,000\\ \text{Total}& & 12,18,000& 9,24,000\end{array}$

$\begin{array}{ccc}\text{Particulars}& 31-03-2013& 31-03-2012\\ & \text{Amount(Rs)}& \text{Amount(Rs)}\\ \text{Reserves and Surplus}& & \\ \text{Surplus (Balance in statement of P and L)}& 3,08,000& 1,82,000\end{array}$

Additional Information : (i) An old machinery having book value of Rs 42,000 was sold for Rs 56,000. (ii) Depreciation provided on machinery during the year was Rs 28,000.

Answer 1

CASH FLOW STATEMENT

for the year ended 31st March, 2013

$\begin{array}{ccc}\text{Particulars}& \text{Amount(Rs)}& \text{Amount(Rs)}\\ \text{(I)}\text{Cash Flow from Operating Activities}:& & \\ \text{Net Profit before Tax}(\text{Rs}3,08,000-\text{Rs}1,82,000)& & 1,26,000\\ \text{Adjustments for Non-cash and Non-operating Expenses}& & \\ \text{Depreciation}& 28,000& \\ \text{Profit on Sale of Machinery}& (14,000)& 14,000\\ \text{Operating profit before Working Capital Changes}& & \overline{1,40,000}\\ \text{Changes in Current Assets and Current Liabilities}:& & \\ \text{Add: Increase in Trade Payables}& 98,000& \\ \text{Add: Decrease in Inventories}& 42,000& \\ \text{Less: Incrase in Trade Receivables}& \underset{–}{(2,10,000)}& \underset{–}{(70,000)}\\ \text{Net Cash from Operating Activities}& & 70,000\\ \text{(II) Cash Flow from Investing Activities:}& & \\ \text{Sale of Machinery}& 56,000& \\ \text{Purchase of Machinery [See Note]}& \underset{–}{(1,82,000)}& \\ \text{Net Cash used in Investing Activities(II)}& & (1,26,000)\\ \text{(III) Cash Flow from Financing Activities :}& & \\ \text{Issue of Share Capital}& \underset{–}{70,000}& \\ \text{Net Cash from Financing Activities(III)}& & \underset{–}{70,000}\\ \text{(iv) Net Increase in Cash and Cash Equivalents (I + II + III)}& & 14,000\\ \text{Opening Cash and Cash Equivalents}& & 84,000\\ \text{Closing Cash and Cash Equivalents}& & \overline{98,000}\end{array}$

PLANT AND MACHINERY ACCOUNT

$\begin{array}{cccc}\text{Particulars}& \text{Amount}& \text{Particulars}& \text{Amount}\\ & \text{(Rs)}& & \text{(Rs)}\\ \text{To Balance c/d}& 2,80,000& \text{By Bank A/c (Sale)}& 56,000\\ \text{To Statement of Profit and Loss A/c}& 14,000& \text{By Depreciation A/c}& 28,000\\ \text{To Bank A/c (Purchase)}& & \text{By Balance c/d}& 3,92,000\\ \text{(Balance Figure)}& 1,82,000& & \\ & \overline{4,76,000}& & \overline{4,76,000}\end{array}$