Age No 5

age No 5.
89:

Question 1:

Identify the transactions as belonging to (i) Operating Activities, (ii) Investing Activities, (iii)
Financing Activities and (iv) Cash and Cash Equivalents:
(a) Cash Sale of Goods (b) Cash Received against Revenue from Services rendered
(c) Cash Purchase of Goods (d) Cash Paid against Services Taken
(e) Patents Purchased (f) Marketable Securities
(g) Bank Overdraft (h) Proceeds from Issue of Debentures
(i) Purchase of Shares (j) Repayment of Long-term Loan
(k) Commission Received (l) Redemption of Debentures
(m) Interest on Debentures (n) Interest on Investments
(o) Income Tax Paid (p) Income Tax Paid on Gain of Sale of Asset
(q) Cash Received from Debtors (r) Cash Paid to Creditors.
Answer:

CASH AND
OPERATING INVESTING FINANCING CASH
ACTIVITY ACTIVITY ACTIVITY EQUIVALENTS
f. Marketable
a. Cash Sale of Goods e. Patents Purchased g. Bank Overdraft Securities
b. Cash Received
against Revenue from h. Proceeds from Issue
Services rendered i. Purchase of Shares of Debentures
c. Cash Purchase of n. Interest on j. Repayment of Long-
Goods Investments term Loan
d. Cash paid against p. Income Tax paid on l. Redemption of
Services Taken Gain on Sale of Asset Debentures
k. Commission m. Interest on
Received Debentures
o. Income Tax paid
q. Cash Received from
Debtors
r. Cash Paid to
Creditors
Page No 5.90:

Question 2:

Classify the following transactions as Operating Activities for a financial company and a non-
financial company:
(a) Purchase of Shares on a Stock Exchange. (b) Dividend received on Shares.

(c) Dividend paid on Shares. (d) Loans given.
(e) Loans taken. (f) Interest paid on borrowings.
Answer:

OPERATING ACTIVITY
Financial Company Non-Financial Company
a. Purchase of Shares on a Stock Exchange
b. Dividend received on shares
d. Loans given
e. Loans taken
f. Interest paid on borrowings
A financial company deals with securities like shares, bonds, debentures, etc on a regular basis.
These securities form part of their stock and hence purchase and sale of these securities will be
categorized under Operating Activity. But, Dividend paid by them will be the part of Financing
Activities.
However, for a non-financial company issue of shares, debentures, etc form part of financing
activities as such issue will increase the capital employed in the business.
Page No 5.90:

Question 3:

State which of the following would result in inflow/outflow or no flow of Cash and Cash
Equivalents:
(a) Sale of Fixed Assets, Book Value ` 1,00,000 at a profit of `10,000.
(b) Sale of goods against cash.
(c) Purchase of machinery for cash.
(d) Purchase of Land and Building for `10,00,000. Consideration paid by issue of debentures.
(e) Issued fully paid Bonus Shares.
(f) Cash withdrawn from bank.
(g) Payment of Interim Dividend.
(h) Proposed Dividend.
Answer:

Inflow Outflow No Flow
d. Purchase of Land and
Building. Consideration paid
a. Sale of Fixed Assets c. Purchase of Machinery for cash by issue of Debentures.
e. Issued fully paid bonus
b. Sale of goods against cash g. Payment of Interim Dividend shares
f. Cash withdrawn from Bank
h. Proposed Dividend
Page No 5.90:

Question 4:

For each of the following transactions, calculate the resulting Cash Flow and state the nature of
Cash Flow, i.e., whether it is Operating, Investing or Financing:
(a) Acquired machinery for `2,50,000 paying 20% by cheque and executing a bond for the
balance payable.
(b) Paid `2,50,000 to acquire shares in Informa Tech Ltd. and received a dividend of `50,000
after acquisition.
(c) Sold machinery of original cost of `2,00,000 with an accumulated depreciation of `1,60,000
for `60,000.
Answer:

(a) Investing Activity: 50,000
(b) Investing Activity: 2,00,000
(c) Investing Activity: 60,000
Page No 5.90:

Question 5:

Following are the extracts from the Balance Sheet of MAH Ltd. as at 31st March, 2019:

31st March 31st March
2019 2018
Particular ( `) ( `)
Surplus, i.e., Balance in Statement of Profit and
Loss 10,00,000 5,00,000
Dividend Payable 50,000 –
Additional Information: Proposed Dividend for the years ended 31st March, 2018 and
2019 are ` 4,00,000 and ` 5,00,000 respectively.
Prepare the Note to show Net Profit before Tax and Extraordinary Items.
Answer:

Amount
Particulars ( `)
Profit as per Statement of Profit and Loss (10,00,000 – 5,00,000) 5,00,000
Add: Proposed Dividend (Current Year) 4,00,000
Profit Before Taxation and Extraordinary Items 9,00,000

Profit as per Statement of Profit and Loss (7,20,000 – 4,00,000) 3,20,000

Add: Proposed Dividend (Current Year) 1,60,000
Add: Proposed Preference Dividend (Current Year) 10% of 6,00,000 60,000
Add: Interim Dividend 40,000
Page No 5.91:

Question 7:

Calculate Net Profit before Tax and Extraordinary Items of Premier Sales Ltd. from its Balance
Sheet as at 31st March, 2019:

31st 31st
March, March,
Note 2019 2018
Particulars No. ( `) ( `)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 5,00,000 5,00,000
(b) Reserves and Surplus
(Surplus, i.e., Balance in Statement of Profit and Loss) 2,00,000 1,45,000
2. Current Liabilities
(a) Trade Payables 90,000 50,000
(b) Other Current Liabilities 20,000 10,000
(c) Short-term Provisions 1 50,000 30,000
Total 8,60,000 7,35,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets 4,50,000 4,00,000
(b) Non-Current Investments 50,000 1,50,000
2. Current Assets 2,60,000 1,85,000
Total 8,60,000 7,35,000
Notes to Accounts
31st 31st
March, March,
2019 2018
Particulars ( `) ( `)
I. Short-term Provisions
Provision for Tax 50,000 30,000

Additional Information:
(i) Proposed Dividend for the years ended 31st March, 2018 and 2019 are ` 50,000 and ` 75,000
respectively.
(ii) Interim Dividend paid during the year was ` 10,000.
Answer:

Amount
Particulars ( `)
Profit as per Statement of Profit and Loss (2,00,000 – 1,45,000) 55,000
Add: Proposed Dividend (Current Year) 50,000
Add: Provision for Taxation (Current Year) 50,000
Add: Interim Dividend Paid 10,000
Page No 5.92:

Question 8:

From the following information, calculate Net Profit before Tax and Extraordinary Items:
`
Surplus, i.e., Balance in Statement of Profit and Loss (Opening) 1,00,000
Surplus, i.e., Balance in Statement of Profit and Loss (Closing) 3,36,000
Dividend paid in the current year 72,000
Interim Dividend Paid during the year 90,000
Transfer to Reserve 1,00,000
Provision for Tax for the current year 1,50,000
Refund of Tax 3,000
Loss due to Earthquake 2,00,000
Insurance Proceeds from Earthquake disaster settlement 1,00,000
Answer:

Cash Flow Statement
for the year ended…
Amount
Particulars ( `)
A Cash Flow from Operating Activities
Profit as per Statement of Profit and Loss (3,36,000 − 1,00,000) 2,36,000
Add: Transfer to Reserve 1,00,000
Proposed Dividend 72,000
Interim Dividend 90,000
Provision for Tax 1,50,000
Extraordinary Items (Loss due to Earthquake) 2,00,000
Less: Extraordinary Items (Insurance Proceeds from Earthquake
disaster settlement ) (1,00,000)
Refund of Tax (3,000)
Net Profit before Tax and Extraordinary Items 7,45,000
Page No 5.92:

Question 9:

From the following information, calculate Operating Profit before Working Capital Changes:
`
Net Profit before Tax and Extraordinary Items 4,47,000
Depreciation on Machinery 84,000
Interest on Borrowings 16,800
Goodwill Amortized 18,600
Loss on Sale of Furniture 18,000
Premium on Redemption of Preference Shares 6,000
Gain (Profit) on Sale of Investments 12,000
Interest and Dividend Received on Investments 27,600
Answer:
Cash Flow Statement
for the year ended March 31, ….
Amount Amount
Net Profit Before Taxation and Extraordinary Items 4,47,000
Items to be Added:
Interest on Borrowings 16,800
Goodwill Amortized 18,600
1,37,400
Items to be Deducted:
Profit on Sale of Investment (12,000)
Interest and Dividend Received on Investment (27,600) (39,600)
Operating Profit before Working Capital Adjustments 5,44,800

Note: Assuming Premium on Redemption of Preference Shares has been paid out of the
Securities Premium Reserve Balance.
Page No 5.92:

Question 10:

From the following Balance Sheet of Double Tree Ltd. as at 31st March, 2019 and additional
information, calculate Operating Profit before Working Capital Changes:

31st 31st
March, March,
Note 2019 2018
(a) Share Capital 5,00,000 5,00,000
(b) Reserves and Surplus 1 6,70,000 5,00,000
(b) Other Current Liabilities (Outstanding Expenses) 20,000 15,000
(c) Short-term Provisions (Provision for Tax) 1,00,000 90,000
Total 13,50,000 11,55,000
II. ASSETS
(a) Fixed Assets (Tangible) 7,50,000 7,30,000
(b) Non-Current Investments 2,50,000 3,00,000
2. Current Assets 3,50,000 1,25,000
Total 13,50,000 11,55,000
Notes to Accounts
31st 31st
March, March,
2019 2018
I. Reserve and Surplus
General Reserve 5,00,000 4,00,000
Surplus, i.e., Balance in Statement of Profit and Loss 1,70,000 1,00,000
6,70,000 5,00,000

Additional Information: Depreciation for the year was `75,000.
Answer:

Computation of Operating Profit before Working Capital Changes
for the year ended March 31, 2019
Amount Amount
Transfer to General Reserve (5,00,000 – 4,00,000) 1,00,000
Provision for Taxation (Current Year) 1,00,000
Profit before Tax 2,70,000
Items to be Added:
Depreciation for the year 75,000
Operating Profit before Working Capital Changes 3,45,000

Page No 5.93:

Question 11:

Calculate Cash Flow from Operating Activities from the following details:

31st 31st
March, March,
2019 2018
Loss 80,000 60,000
Trade Receivables 25,000 31,000
Provision for Depreciation 40,000 30,000
Inventories 80,000 60,000
Outstanding Rent 12,000 21,000
Goodwill 30,000 38,000
Prepaid Insurance 1,000 2,000
Trade Payables (Creditors) 13,000 19,000
Answer:

Amount Amount
Profit as per Statement of Profit and Loss (Net Income) 20,000
Items to be Added:
Depreciation 10,000
Goodwill written off 8,000 18,000
Operating Profit before Working Capital Changes 38,000
Add: Decrease in Current Assets
Trade Receivables 6,000
Prepaid Insurance 1,000
Less: Increase in Current Assets
Inventories (20,000)
Less: Decrease in Current Liabilities
Outstanding Rent (9,000)
Trade Payables (6,000) (28,000)
Cash Generated from operations 10,000
Less: Tax Paid Nil
Net Cash Flows from Operating Activities 10,000
Page No 5.93:
Question 12:

Compute Cash Flow from Operating Activities from the following information:
Particulars `
Net Profit after Provision for Tax and Payment of Dividend 2,15,000
Provision for Tax 45,000
Final Dividend paid during the year 50,000
Depreciation 25,000
Loss on Sale of Machinery 10,000
Patents Amortised 30,000
Gain on Sale of Land 70,000
Income Tax Refund 30,000
Answer:
Cash Flow from Operating Activities
Amount Amount
Net Profit after Provision for Tax and Proposed Dividend 2,15,000
Add: Provision for Tax 45,000
Add: Proposed Dividend 50,000
Profit Before Taxation 3,10,000
Items to be Added:
Depreciation 25,000
Patents Amortised 30,000 65,000
3,75,000
Income Tax Refund (30,000)
Gain on Sale of Land (70,000) (1,00,000)
Operating Profit before Working Capital Changes 2,75,000
Less: Net Tax Paid (45,000 – 30,000) (15,000)
Net Cash Flows from Operating Activities 2,60,000
Page No 5.93:

Question 13:

Calculate Cash Flow from Operating Activities from the following:
(i) Profit form the year is ` 7,00,000 after considering the following items:
Particulars ( `)
Depreciation on Fixed Assets 40,000
Goodwill Amortised 20,000
Gain on Sale of Land 90,000
Appropriation of Profit towards General Reserve 60,000
(ii) Following is the position of Current Assets and Current Liabilities
Closing Opening
Balance Balance
Trade Payables 50,000 75,000
Prepaid Expenses 10,000 18,000
Answer:
Amount Amount
Profit as per Statement of Profit and Loss 8,00,000
Add: Provision for Tax 1,10,000
Add: Proposed Dividend 1,10,000
Less: Compensation for Natural Disaster (75,000)
Profit Before Tax and Extraordinary items 9,45,000
Items to be Added:
Depreciation on Plant and Machinery 1,50,000
Loss on sale of Investment 30,000 1,80,000
11,25,000
Profit on Sale of Land (90,000)
Dividend Received (20,000) (1,10,000)
Add: Increase in Current Liabilities 70,000
Add:Decrease in Current Assets 40,000 1,10,000
11,25,000
Less: Decrease in Current Liabilities (10,000)
Less: Increase in Current Assets (60,000) (70,000)
Cash Generated from Operations 10,55,000
Less: Net Tax Paid (1,20,000 – 10,000) (1,10,000)
Cash Flow from operations after Tax
Add: Compensation for Natural Disaster 75,000
Note: There is a misprint in the answer given in the textbook. The correct amount for 'Net Cash
Flows from Operating Activities' should be ` 10,20,000 (as calculated above).
Page No 5.94:

Question 14:

Grand Hospitality Ltd., reported Net Profit after Tax of ` 6,40,000 for the year ended 31st
March, 2019. The relevant extract from Balance Sheet as at 31st March, 2019 is:
31st 31st
March, March,
2019 2018
Inventories 1,15,000 1,25,000
Trade Receivables 1,50,000 1,10,000
Trade Payables 1,10,000 80,000

Depreciation charged on Plant and Machinery ` 55,000, insurance claim received ` 50,000, gain
(profit) on sale of investment ` 20,000 appeared in the Statement of Profit and Loss for the year
ended 31st March, 2019. Calculate Cash Flow from Operating Activities.
Answer:

Amount Amount
Less: Extraordinary Item
Insurance Claim (50,000)
Items to be Added:
Depreciation on Plant and Machinery 55,000
6,65,000
Gain on Sale of Investments (20,000)
Add: Increase in Current Liabilities
Trade Payables 30,000
Less: Increase in Current Assets 6,85,000
Trade Receivables (40,000)
Prepaid Expenses (14,000) (54,000)
Cash Generated from Operations (before tax and
Extraordinary items) 6,31,000
Less: Tax Paid (15,000)
Cash Flow from Operating Activities after Tax 6,16,000
Add: Extraordinary items
Insurance Claim 50,000
Page No 5.94:

Question 15:

Calculate Cash Flow from Operating Activities from the following information.

31st March
2017
Particular ( `)
Net Profit (Difference between Closing and Opening Balance of Surplus, i.e., Balance in
Statement of Profit and Loss) 8,00,000
Final Dividend paid in the year 1,10,000
Compensation for Natural Disaster credited to Statement of Profit and Loss 75,000
Depreciation 1,50,000
Loss on Sale of Investment 30,000
Gain (Profit) on Sale of Land 90,000
Dividend Received 20,000
Decrease in Current Assets (Other than Cash and Cash Equivalents) 40,000
Increase in Current Liabilities 70,000
Decrease in Current Liabilities 10,000
Increase in Current Assets (Other than Cash and Cash Equivalents) 60,000
Income Tax Refund 10,000
Income Tax Paid 1,20,000
Answer:
Amount Amount
Add: Provision for Tax 1,10,000
Add: Proposed Dividend 1,10,000
Less: Income Tax Refund (10,000)
Less: Compensation for Natural Disaster (75,000)
Items to be Added:
Depreciation on Plant and Machinery 1,50,000
Loss on sale of Investment 30,000 1,80,000
11,15,000
Profit on Sale of Land (90,000)
Dividend Received (20,000) (1,10,000)
Add: Increase in Current Liabilities 70,000
Add: Decrease in Current Assets 40,000 1,10,000
11,15,000
Less: Decrease in Current Liabilities (10,000)
Less: Increase in Current Assets (60,000) (70,000)
Less: Tax Paid (1,20,000)
Cash Flow from operations after Tax 9,25,000
Add: Compensation for Natural Disaster 75,000
Add: Income Tax Refund 10,000

Question 16:

Following information is related to ABC Ltd.:

STATEMMENT OF PROFIT AND LOSS
for the year ended 31st March, 2019
Note
Particulars No. ( `)
I. Revenue from Operations (Net Sales) 30,00,000
II. Other Income 1 45,000
III. Total Revenue (I + II) 30,45,000
IV. Expenses;
(a) Purchases of Stock-in-Trade 23,03,000
(b) Change in Inventories of Stock-in-Trade 2 (16,000)
(c) Depreciation and Amortisation Expenses 1,85,000
(d) Other Expenses 3 3,29,000
Total Expenses 28,01,000
V. Profit before Tax (III − IV) 2,44,000
VI. Less: Provision for Tax 64,000
VII. Profit after Tax (V – VI) 1,80,000
Notes to Accounts
Particulars `
1. Other Income
(a) Dividend Received 5,000
(b) Gain (Profit) on Sale of Plant 40,000
45,000
2. Change in Inventories of Stock-in-Trade
Opening Inventories 2,84,000
Less: Closing Inventories 3,00,000
(16,000)
3. Other Expenses
(a) Office Expenses 58,000
(b) Selling Expenses 2,35,000
(c) Loss on Sale of Assets 36,000
3,29,000

Balance as on
31st March, Balance as on 31st
Other Information: 2019 ( `) March, 2018 ( `)
Trade Payables 2,78,000 2,50,000
Inventories 3,00,000 2,84,000
Office Expenses Outstanding ... 5,000
Selling Expenses Outstanding 25,000 22,000
Calculate Cash Flow from Operating Activities.
Answer:

Amount Amount
Add: Tax Expense 64,000
Items to be Added:
Loss on Sale of Assets 36,000
Depreciation and Amortisation Expenses 1,85,000 2,21,000
4,65,000
Dividend Received (5,000)
Profit on Sale of Plant (40,000) (45,000)
Office Expenses Outstanding (5,000)
Selling Expenses Outstanding 3,000 31,000
Inventories (16,000) (53,000)
Page No 5.95:

Question 17:

Compute Cash Flow from Operating Activities from the following:
Closing Opening
Balances Balances
Surplus, i.e., Balance in Statement of Profit and Loss 65,000 60,000
Trade Receivables:
Debtors 67,000 1,02,000
Bills Receivable 1,03,000 62,000
Provision for Depreciation 30,000 20,000
Outstanding Expenses 12,000 30,000
Goodwill 70,000 80,000
An asset costing ` 40,000 having book value of ` 28,000 was sold for ` 36,000.
Answer:

Amount Amount
Profit as per Statement of Profit or Loss 5,000
Add: Transfer to Reserve 35,000 40,000
Profit before Tax and Extraordinary Items 40,000
Items to be Added:
Depreciation(WN1) 22,000
Goodwill written off 10,000 32,000
Profit on Sale of Asset (8,000)
Operating Profit before Working Capital Adjustments 64,000
Bills Receivables (41,000)
Add:Decrease in Current Assets
Debtors 35,000
Outstanding Expenses (18,000)
Cash Generated from Operations 40,000
Less: Tax Paid Nil

Working Note1:
Provision for Depreciation Account
Dr. Cr.
Amount Amount
Particulars ( `) Particulars ( `)
Asset A/c (40,000 – 28,000)* 12,000 Balance b/d 20,000
Profit and Loss A/c (Depreciation
Balance c/d 30,000 charged during the year) 22,000
42,000 42,000

Amount
Particulars ( `)
Cost of Asset Sold 40,000
Less: Provision for
Depreciation* (12,000)
Book Value 28,000
Less: Sale of Asset (36,000)
Profit on Sale 8,000
Page No 5.95:

Question 18:

Charles Ltd. earned a profit of ` 1,00,000 after charging depreciation of 20,000 on assets and a
transfer to General Reserve of ` 30,000. Goodwill amortised was ` 7,000, and gain on sale of
machinery was ` 3,000. Other information available is (changes in the value of Current Assets
and Current Liabilities): trade receivables showed an increase of ` 3,000; trade payables an
increase of ` 6,000; Prepaid expenses an increase of ` 200; and outstanding expenses a decrease
of ` 2,000.
Ascertain Cash Flow from Operating Activities.
Answer:

Cash Flow Statement
Amount Amount
Items to be Added:
Depreciation 20,000
Goodwill amortised 7,000
Transfer to General Reserve 30,000
Gain on sale of machinery (3,000) 54,000
Prepaid Expenses (200)
Outstanding Expenses (2,000)
Trade Payables 6,000 800
Page No 5.96:

Question 19:

Compute Cash Flow from Operating Activities from the following:
(i) Profit for the year ended 31st March, 2019 is ` 10,000 after providing for depreciation
of ` 2,000.
(ii) Current Assets and Current Liabilities of the business for the year ended 31st March, 2018
and 2019 are as follows:

2018 2019
Provision for Doubtful Debts 1,000 1,200
Other Current Assets 10,000 12,000
Expenses Payables 1,000 1,500
Accrued Income 3,000 4,000
Income Received in Advance 2,000 1,000
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss 10,000
Items to be Added:
Depreciation 2,000 2,000
Accrued Income (1,000)
Inventories (3,000)
Other Current Assets (2,000)
Income Received in Advance (1,000)
Expenses Payable 500
Provision for Doubtful Debts 200
Prepaid Expenses 1,000 (4,300)
Page No 5.96:
Question 20:

Calculate Cash Flow from Operating Activities from the following information:
INCOME STATEMENT (STATEMENT OF PROFIT AND LOSS)
Note
I. Revenue from Operations (Sales) 5,98,000
II. Other Income 1 19,500
III. Total Revenue (I + II) 6,17,500
IV. Expenses;
Cost of Materials Consumed 4,00,000
Change in Inventories of Finished Goods and Work-in-Progress 2 15,000
Employee Benefit Expenses 1,05,000
Depreciation and Amortisation Expenses 15,000
Other Expenses 3 20,000
Total Expenses 5,55,000
V. Profit before Tax (III − IV) 62,500
VI. Tax @ 30% 18,750
VII. Profit after Tax (V − VI) 43,750
Notes to Accounts
Particulars `
1. Other Income
Rent 15,000
Gain (Profit) on Sale of Machinery 2,500
Interest on Debentures held as Investments 2,000
19,500
Changes in Inventories of Finished Goods and Work-in-
Progress
(a) Finished Goods
Opening Inventories 37,500
Less: Closing Inventories 25,000
Sub-Total 12,500
(b) Work-in-Progress
Opening Inventories 22,500
Less: Closing Inventories 20,000
Sub-Total 2,500
Total (a + b) 15,000
2. Other Expenses
Office Expenses 12,500
Selling Expenses 6,000
20,000

As on 31st As on 1st
March, April,
2019 2018
Current Assets and Current Liabilities ( `) ( `)
Answer:
Cash Flow Statement
Amount Amount
Profit Before Taxation 62,500
Items to be Added:
Depreciation and Amortization Expenses 15,000
Profit on Sale of Machinery (2,500)
Rent (15,000)
Interest on Investment (2,000) (3,000)
Prepaid Expenses (1,500)
Trade Payables (2,500)
Outstanding Expenses 3,000
Inventory (Finished goods `12,500 + Work-in-
Progress `2,500) 15,000 9,000

Question 21:

Mars Ltd. has Plant and Machinery whose written down value on 1st April, 2017 was `9,60,000
and on 31st March, 2018 was `10,50,000. Depreciation for the year was `35,000. In the
beginning of the year, a part of plant was sold for `45,000 which had a written down value
of `30,000.
Calculate Cash Flow from Investing Activities
Answer:

Cash Flow from Investing Activities
Amount Amount
Purchase of Plant and Machinery (1,55,000)
Sale of Plant and Machinery 45,000
Net Cash Used in Investing Activities (1,10,000)

Working Notes:
Plant and Machinery Account
Dr
. Cr.
Amount Amount
Balance b/d 9,60,000 Depreciation 35,000
Profit and Loss A/c (Profit on Sale) 15,000 Bank A/c (Sale) 45,000
Bank A/c (Purchase) 1,55,000 Balance c/d 10,50,000
11,30,000 11,30,000

Page No 5.97:

Question 22:

From the following details. calculate Cash Flow from Investing Activities
Closing Opening
Machinery (At Cost) 10,00,000 9,50,000
Accumulated Depreciation 1,50,000 1,10,000
Patents 2,00,000 3,00,000
1. During the year, machine costing ` 90,000 with accumulated depreciation of ` 60,000 was sold
for ` 50,000.
2. Patents written off were ` 50,000 while a part of patents were sold at a profit of ` 40,000.
Answer:

Amount Amount
Purchase of Machinery (WN1) (1,40,000)
Sale of Machinery 50,000
Sale of Patents (WN3) 90,000 Nil
Net Cash Used in Investing Activities Nil

Working Notes:

WN1:

Machinery Account
Dr. Cr.
Amount Amount
Balance b/d 9,50,000 Provision for Depreciation A/c 60,000
Profit and Loss A/c
(Profit on Sale) 20,000 Bank A/c (Sale) 50,000
11,10,000 11,10,000

WN2:
Patents Account
Dr
. Cr.
Amount Amount
Balance b/d 3,00,000 Patents Written off 50,000
Profit and Loss A/c
(Profit on Sale) 40,000 Bank A/c (Sale) (Balancing Figure) 90,000
Balance c/d 2,00,000
3,40,000 3,40,000

WN3:
Provision for Depreciation Account
Dr. Cr.
Amount Amount
Asset A/c 60,000 Balance b/d 1,10,000
Profit and Loss A/c
Balance c/d 1,50,000 (Depreciation charged during the year) 1,00,000
2,10,000 2,10,000
Page No 5.97:

Question 23:
Welprint Ltd. has given the following information: `

Machinery as on 1st April, 2018 50,000
Machinery as on 31st March, 2019 60,000
Accumulated Depreciation on 1st April, 2018 25,000
Accumulated Depreciation on 31st march, 2019 15,000
During the year, a machine costing ` 25,000 (accumulated depreciation thereon ` 15,000) was
sold for ` 13,000.
Calculate Cash Flow from Investing Activities on the basis of the above information.
Answer:

Cash Flow Statement
Amount Amount
Cash Flow from Investing
Activities
Purchase of Machinery (35,000)
Sale of Machinery 13,000 (22,000)
Cash Used in Investing Activity (22,000)
Working Notes:
Machinery Account
Cr
Dr. .
Amoun Amoun
t t
Balance b/d 50,000 Bank A/c 13,000
Accumulated
Profit and Loss A/c 3,000 Depreciation A/c 15,000
Bank A/c (Bal. Fig.) 35,000 Balance c/d 60,000
88,000 88,000

Accumulated Depreciation Account
Dr. Cr.
Amo Amo
unt unt
15,00 25,00
Machinery A/c 0 Balance b/d 0
Profit and Loss
15,00 A/c
Balance c/d 0 (Bal. Fig.) 5,000
30,00 30,00
0 0
Page No 5.97:

Question 24:

From the following details. Calculate Cash Flow from Investing Activities
31st
31st March, March,
Particulars 2019 ( `) 2018 ( `)
Investment in 10%
Debentures 10,00,000 5,00,000
Land and Building 15,00,000 9,00,000

1. Half of the investment held in the beginning of the year were sold at 10% profit.
2. Depreciation on Land and Building was ` 50,000 for the year.
3. Interest received on investments ` 75,000.
Answer:
Amount Amount
Purchase of Land and Building (WN1) (6,50,000)
Interest received on Investments 75,000
Sale of Debentures (WN2) 2,75,000
Purchase of Debentures (WN2) (7,50,000) (10,50,000)

Working Notes:

WN1:
Land and Building Account
Dr. Cr.
Amount Amount
Balance b/d 9,00,000 Depreciation A/c 50,000
15,50,000 15,50,000

WN2:
Investment in Debentures Account
Dr
. Cr.
Amount Amount
Balance b/d 5,00,000 Bank A/c (Sale) 2,75,000
Profit and Loss A/c
(Profit on sale) 25,000 Balance c/d 10,00,000
Bank A/c (Purchase) 7,50,000
12,75,000 12,75,000
Page No 5.98:

Question 25:

From the following information, calculate Cash Flow from Investing Activities:
` `
Purchase of Machine 2,50,000 Purchase of Investments 1,60,000
Purchase of Goodwill 1,00,000 Sale of Patents 40,000
Sale of Machine 35,000 Interest and Dividend Received 10,000
Sale of Investment 50,000
A building was purchased as investment out of surplus which was let out for commercial
purposes.
Rent Received `20,000.
Answer:
Amount Amount
Purchase of Machine (2,50,000)
Purchase of Goodwill (1,00,000)
Purchase of Investments (1,50,000)
Sale of Machine 35,000
Sale of Patents 40,000
Interest and Dividend Received 10,000
Rent Received 20,000

Page No 5.98:

Question 26:

From the following Balance Sheet of Combiplast Ltd. for the year ended 31st March, 2019 and
additional information, calculate Cash Flow from Investing Activities:

31st 31st
No Marc Marc
te h, h,
No 2019 2018
Particulars . ( `) ( `)
7,50,0 5,00,0
(a) Share Capital 00 00
10,00, 8,50,0
(b) Reserves and Surplus 000 00
4,50,0 3,50,0
2. Current Liabilities 00 00
22,00, 17,00,
Total 000 000
II. ASSETS
12,00, 12,00,
(a) Fixed Assets−Tangible Assets 1 000 000
00 00
2. Current Assets
3,00,0 1,10,0
(a) Trade Receivables 00 00
2,00,0
(b) Cash and Cash Equivalents 00 90,000
22,00, 17,00,
Total 000 000

Notes to Accounts
31st 31st
Marc Mar
h, ch,
2019 2018
I. Tangible Assets
3,00,0 3,00,
Land 00 000
4,00,0 4,00,
Building 00 000
5,00,0 5,00,
Plant and Machinery 00 000
12,0
12,00, 0,00
000 0

Additional Information: During the year the company sold machinery at Book
Value of ` 1,50,000.
Answer:
Cash Flow Statement
Amount Amount
B Cash Flow from Investing Activities
Sale of Machinery 1,50,000
Purchase of Machinery (1,50,000)
Purchase of Non-Current Investments (2,00,000)

Working Notes:
Plant & Machinery Account
Dr. Cr.
Amount Amount
Balance b/d 5,00,000 Bank A/c (Sale) 1,50,000
Bank A/c (Purchase- Bal. Fig.) 1,50,000 Balance c/d 5,00,000
6,50,000 6,50,000
Page No 5.98:

Question 27:

From the following information, calculate Cash Flow from Investing Activities

31st March, 31st March,
2019 2018
Plant and Machinery 10,00,000 8,50,000
Investment (Long-term) 1,00,000 40,000
Land (At Cost) 1,00,000 2,00,000

1. Depreciation charged on Plant and Machinery ` 50,000.
2. Plant and Machinery with a Book Value of ` 60,000 was sold for ` 40,000.
3. Land was sold at a profit of ` 60,000.
4. No investment was sold during the year.
Answer:
Amount Amount
Purchase of Plant and Machinery (WN1) (2,60,000)
Purchase of Investments (60,000)
Sale of Plant and Machinery (WN1) 40,000
Sale of Land (WN2) 1,60,000

Working Notes:

WN1
Dr. Cr.
Amount Amount
Bank A/c (Purchases- Bal. Fig.) 2,60,000 Bank A/c (Sale) 40,000
Profit and Loss A/c (Loss on Sale) 20,000
11,10,000 11,10,000

WN2
Land Account
Dr. Cr.
Amount Amount
Balance b/d 2,00,000 Bank A/c (Sale- Bal. Fig.) 1,60,000
Profit and Loss A/c (Profit on Sale) 60,000 Balance c/d 1,00,000
2,60,000 2,60,000
Page No 5.99:

Question 28:

From the following extracts of a company, calculate Cash Flow from Investing Activities:

31st M 31st M
arch, arch,
2019 2018
1,00,0
Goodwill 75,000 00
1,00,0 75,00
Patents 00 0
1,00,0
Land 90,000 00
2,46,0 21,00
Furniture 00 0
2,00,0 2,00,0
Plant and Machinery (Net) 00 00
1,80,0 2,00,0
10% Investments 00 00
Accrued Interest on Investments 6,000 ...
Answer:
Amount Amount
Purchase of Patents (25,000)
Purchase of Furniture (2,25,000)
Interest received on Investment 14,000
Sale of Land 10,000

Note: It has been assumed that Investments have been sold at their Book Value at the end of the
accounting period.

Working Notes:
Computation of Interest on Investments
Interest on Investments=2,00,000×10/100 =20,000
Less: Interest Accrued = 6,000
Interest Received On Investment = 14,000

Page No 5.99:

Question 29:

Calculate Cash Flow from Investing Activities from the following information:

, ,
2019 2018
Investment in Land 3,00,000 3,00,000
Shares in Damodar Ltd. 1,50,000 1,50,000
12% Long-term Investments 80,000 50,000
Patents 70,000 1,00,000
Goodwill 1,50,000 1,00,000

1. A piece of land was purchased as an investment out of surplus. It was let out for commercial
purpose and the rent received was ` 20,000.
2. Dividend received from Damodar Ltd. @ 12%.
3. Patents written off to the extent of ` 20,000. Some patents were sold at a profit of ` 10,000.
4. A machine costing ` 80,000 (depreciation provided thereon ` 30,000) was sold for ` 35,000.
Depreciation charged during the year was ` 70,000.
5. During the year 12% investments were purchased for ` 1,00,000 and some investments were
sold at a profit of ` 10,000. Interest on investments for the year was duly received.
Answer:
Amount Amount
Purchase of Investment (1,00,000)
Purchase of Goodwill (50,000)
Dividend Received (1,50,000 × 12%) 18,000
Interest on Investments 6,000
Sale of Patents 20,000
Working Notes:
WN1 Computation of Interest on Investments
Interest on 12% Long-term Investments = 50,000×12/100=6,000
WN2
Patents Account
Dr. Cr.
Amount Amount
Balance b/d 1,00,000 Profit and Loss A/c (Written-off) 20,000
Profit and Loss A/c (Profit on Sale) 10,000 Bank A/c (Sale- Bal. Fig.) 20,000
Balance c/d 70,000
1,10,000 1,10,000
WN3
12% Long-Term Investments Account
Dr. Cr.
Amount Amount
Balance b/d 50,000 Bank A/c (Sale- Bal. Fig.) 80,000
Bank A/c (Purchase) 1,00,000 Balance c/d 80,000
Profit and Loss A/c (Profit on Sale) 10,000
1,60,000 1,60,000
WN3
Dr. Cr.
Amount Amount
Bank A/c (Purchase- Bal. Fig.) 2,70,000 Bank A/c (Sale) 35,000
8,70,000 8,70,000
Page No 5.100:

Question 30:

From the following information, calculate Cash Flow from Investing Activities:
31st
Mar 31st
ch, Mar
201 ch,
9 2018
5,50 5,00,
Machinery (At cost) ,000 000
1,70 1,00,
Accumulated Depreciation ,000 000
During the year, a machinery costing ` 50,000 (accumulated depreciation provided

thereon ` 20,000) was sold for ` 26,000.
Answer:
Amount Amount
Net Cash Used in Investing Activities (74,000)

Working Notes:
Machinery Account
Dr. Cr.
Amount Amount
To Balance b/d 5,00,000 Accumulated Depreciation A/c 20,000
To Bank A/c
(Purchase- Bal. Fig.) 1,00,000 Bank A/c (Sale) 26,000
6,00,000 6,00,000

Dr. Cr.
Amount Amount
To Machinery A/c 20,000 Balance b/d 1,00,000
Profit and Loss A/c (Dep. charged
Balance c/d 1,70,000 during the year- Bal. Fig.) 90,000
1,90,000 1,90,000

Page No 5.100:

Question 31:

From the following particulars, calculate Cash Flow from Investing Activities
Purchased Sold
Machinery 6,20,000 2,00,000
Investments 2,40,000 80,000
Goodwill 1,00,000 ...
Patents ... 1,50,000
1. Interest received on debentures held as investment ` 8,000.
2. Interest paid on debentures issued ` 20,000.
3. Dividend received on shares held as investment ` 20,000.
4. Dividend paid on Equity Share Capital ` 30,000.
5. A plot of land was purchased out of the surplus funds for investment purposes and was let out for
commercial use. Rent received ` 50,000 during the year.
Answer:
Amount Amount
Purchase of Goodwill (1,00,000)
Sale of Machinery 2,00,000
Dividend Received 20,000
Sale of Investments 80,000
Interest on Debentures 8,000
Sale of Patents 1,50,000

Note: Dividend paid and interest paid is a part of Financing Activities.
Page No 5.100:

Question 32:

From the following information, calculate Cash Flow from Financing Activities:
1st April, 31st March,

2018 2019
( `) ( `)
Long-term Loan 2,00,000 2,50,000
During the year, the company repaid a loan of `1,00,000.
Answer:
Cash Flow Statement
Amoun
Amount t
Cash Flow from Financing Activities
(1,00,000
Loan Repaid )
New Loan Raised 1,50,000 50,000
Cash Flows from Financing Activity 50,000
Working Notes:
Long Term Loan Account
Dr. Cr.
Amount Amount
Bank A/c (Repayment
of Loan) 1,00,000 Balance b/d 2,00,000
Balance c/d 2,50,000 Bank A/c (Loan Raised) 1,50,000
3,50,000 3,50,000
Page No 5.100:

Question 33:

From the following information, calculate Cash Flow from Financing Activities:

, ,
2019 2018
Equity Share Capital 10,00,000 9,00,000
Securities Premium Reserve 2,60,000 2,50,000
12% Debentures 1,00,000 1,50,000

Additional Information: Interest paid on debentures ` 18,000.
Answer:
Amount Amount
Proceeds from Issue of Equity Shares 1,10,000
Redemption of 12% Debentures (50,000)
Interest Paid (18,000)
Net Cash Flows from Financing Activities 42,000
Page No 5.101:

Question 34:

From the following extracts of Balance Sheet of Exe Ltd., calculate Cash Flow from Financing
Activities:

31st Marc 31st Marc
h, h,
2019 2018
10% Preference Share Capital 4,00,000 5,50,000
Securities Premium Reserve 2,25,000 1,00,000
12% Debentures 4,00,000 3,00,000

1. Equity Shares were issued on 31st March, 2019.
2. Interim dividend on Equity Shares was paid @ 15%.
3. Preference Shares were redeemed on 31st March, 2019 at a premium of 5%. Premium paid
was debited to Statement of Profit and Loss.
4. 12% Debentures of face value ` 1,00,000 were issued on 31st March, 2019.
Answer:
Amount Amount
Issue of Shares 1,25,000
Transfer to Securities Premium Reserve 1,25,000
Issue of Debentures 1,00,000
Premium on redemption of Preference Shares (5% of 1,50,000) (7,500)
Interim Dividend Paid(15% of 4,00,000) (60,000)
Redemption of Preference Share Capital (1,50,000)
Interest on Debentures (12% of 3,00,000) (36,000)
Interest on Preference Share Capital (55,000)
Net Cash Flow from Financing Activities 41,500
Page No 5.101:

Question 35:

From the following information, calculate Cash Flow from Investing and Financing Activities:
2019 2018
Machinery (At cost) 50,000 40,000
Accumulated Depreciation 12,000 10,000
Capital 35,000 30,000
Bank Loan ... 10,000
During the year, a machine costing ` 10,000 was sold at a loss of ` 2,000. Depreciation on
machinery charged during the year amounted to ` 6,000.
Answer:
Cash Flow Statement
Amount Amount
Sale of Machine 4,000
Net Cash from (used in) Investing Activities (16,000)
Proceeds from Issue of Equity Shares 5,000
Repayment of Bank Loan (10,000)
Net Cash from (used in) Financing Activities (5,000)

Working Notes:
Machinery Account
Dr. Cr.
Amount Amount
Balance b/d 40,000 Accumulated Depreciation A/c 4,000
Bank A/c (Purchase- Bal. Fig.) 20,000 Bank A/c (Sale) 4,000
Balance c/d 50,000
60,000 60,000


Dr. Cr.
Amount Amount
To Machinery A/c (Bal. Fig.) 4,000 Balance b/d 10,000
By Profit and Loss A/c (Dep.
Balance c/d 12,000 charged during the year) 6,000
16,000 16,000

Question 36:

From the following information, calculation Cash Flow from Operating Activities and Investing
Activities:

31st, 31st,
March, March,
2018, 2019,
Surplus, i.e., Balance in Statement of
Profit and Loss 2,50,000 10,00,000
Current Assets (Trade Receivables
and Inventories) 11,50,000 13,00,000
Fixed Assets (Tangible) 21,25,000 23,30,000
Accumulated Depreciation 10,62,500 11,00,000

1. A machine having book value of ` 1,00,000 (Depreciation provided thereon ` 1,62,500) was
sold at a loss of ` 20,000.
2. Tax paid during the year ` 75,000.
Answer:
Cash flow Statement
Amo Amo
unt unt
A. Cash Flow from Operating Activities
7,50,0
Net Profit as per Statement of Profit & Loss 00
75,00
Add: Provision for Tax made 0
8,25,0
Net Profit before Tax and Extraordinary Items 00
2,00,0
Add: Depreciation charged during the year 00
20,00
Add: Loss on Sale of Machine 0
10,45,
Net Profit before working Capital changes 000
2,75,0
Add: Increase in Trade Payables 00
Less: Increase in Current Assets (1,50,
000)
11,70,
Net Profit before Tax 000
75,00
Less: Tax Paid during the year 0
10,95
Cash Flow from Operating Activities ,000
B. Cash flow from Investing Activities
(4,67,
Purchase of Fixed Asset 500)
80,00
Sale of Machine 0
3,87,
Cash used in Investing Activities 500

Dr. Accumulated Depreciation A/c Cr.
Amount Amount
Date Particulars ( `) Date Particulars ( `)
2019 2018
March To Fixed Asset A/c April
31 (Depreciation on Mach. Sold) 1,62,500 01 By Balance b/d 10,62,500
By Statement of Profit & Loss
March A/c
31 To balance c/d 11,00,000 (Bal. Fig.) 2,00,000
12,62,500 12,62,500

Dr
. Fixed Assets A/c C
Amount Amount
2018 2019
April Marc
01 To balance b/d 21,25,000 h 31 By Accumulated Depreciation A/c 1,62,5
Marc By Statement of Profit & Loss A/c-
2019 h 31 Loss 20,0
Marc
h 31 By Bank A/c (1,00,000 – 20,000) 80,0
March Marc
31 To Cash/Bank A/c 4,67,500 h 31 By balance c/d 23,30,0
25,92,500 25,92,5
Page No 5.102:

Question 37:

XYZ. Ltd. provided the following information, calculate Net Cash Flow from Financing
Activities:

Particular 2019 ( `) 2018 ( `)
12% Debentures 2,00,000 1,00,000

1.Interest paid on debentures ` 19,000.
2. Dividend paid in the year ` 50,000.
3. During the year, XYZ Ltd. issued bonus shares in the ratio of 5 : 1 by capitalizing reserve.
Answer:
Amount Amount
Proceeds from Issue of 12% Debentures 1,00,000
Dividend Paid (50,000)
Net Cash Flows from Financing Activities 31,000

Note: Amount of Equity Share Capital has been increased due to the issue of Bonus Shares
which does not involve any flow of cash. Therefore, it is not considered in the Financing
Activities.
Page No 5.102:

Question 38:

From the following information, calculate Net Cash Flow from Operating Activities and
Financing Activities:

31st Ma 31st Ma
rch rch
2019 2018
13,75,0 11,25,0
Equity Share Capital 00 00
5,00,00 7,50,00
5% Preference Share Capital 0 0
3,75,00 3,00,00
General Reserve 0 0
3,75,00 (3,50,0
Surplus i.e., Balance in Statement of Profit and Loss 0 00)
Securities Premium Reserve 25,000 ...
1,00,00
Provision for Tax 0 50,000
6,50,00 3,75,00
Non-current Liabilities (8% Debentures) 0 0
1,00,00 1,25,00
Short-term Borrowings (8% Bank Loan) 0 0
5,00,00 2,50,00
Trade Payables 0 0
13,00,0 11,50,0
Trade Receivables and Inventories 00 00

(i) During the year additional debentures were issued at par on 1st October and Bank Loan was
repaid on the same date.
(ii) Dividend on Equity Shares @ 8% was paid on Opening Balance.
(iii) Income tax ` 1,12,500 has been provided during the year.
(iv) Preference shares were redeemed at par at the end of the year.
Answer:
Cash Flow Statement

Amount Amount
Items to be Added:
Dividend on Equity Shares 90,000
Dividend on Preference Shares 37,500
Interest on Bank Loan 9,000
Transfer to General Reserve 75,000 3,65,000
Trade Receivables& Inventories (1,50,000)
Less: Taxes Paid 62,500
Cash Flow from Operating Activities 11,27,500

Cash Flow Statement
Amount Amount
Dividend on Equity Shares (90,000)
Dividend on Preference Shares (37,500)
Interest on Debentures (41,000)
Interest on Bank Loan (9,000)
Increase in Securities Premium Reserve 25,000
Proceeds from Issue of Equity Shares 2,50,000
Proceeds from Issue of Debentures 2,75,000
Redemption of Preference Shares (2,50,000)
Cash Flows from Financing Activity 97,500
Working Notes:

Provision for Tax Account
Dr. Cr.
Amount Amount
Bank A/c (Bal. fig.) 62,500 Balance b/d 50,000
Balance c/d 1,00,000 Profit & Loss A/c 1,12,500
1,62,500 1,62,500
Calculation of Interest on Debentures
3,75,000×8/100=30,000
2,75,000×8/100×6/12=11,000
Total Interest=30,000+11,000=41,000
Calculation of Interest on Bank Loan
1,25,000×8/100×6/12=5,000
1,00,000×8/100×6/12=4,000
Total Interest= 5,000+4,000=9,000
Page No 5.103:

Question 39:

From the following information, prepare Cash Flow Statement:
Particulars ( `)
Opening Cash and Bank Balances 1,50,000
Closing Cash and Bank Balances 1,70,000
Decrease in Stock 80,000
Increase in Bills Payable 1,20,000
Sale of Fixed Assets 3,00,000
Repayment of Long-term Loan 5,00,000
Net Profit for the Year 20,000
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss (Net Profit) 20,000
Items to be Added: –
Stock 80,000
Bills Payable 1,20,000
Less: Tax Paid –
Net Cash Flow from Operating Activities 2,20,000
Sale of Fixed Assets 3,00,000
Net Cash Flows from Investing Activities 3,00,000
C Cash Flow from Financing Activities
Repayment of Long-Term Loan (5,00,000)
Net Cash Used in Financing Activities (5,00,000)
D Net Increase or Decrease in Cash and Cash Equivalents 20,000
Add: Cash and Cash Equivalent in the beginning of the
period 1,50,000
Cash and Cash Equivalents at the end of the period 1,70,000
Page No 5.103:

Question 40:

From the following Balance Sheet of Young India Ltd., prepare Cash Flow Statement:

BALANCE SHEET OF YOUNG INDIA LTD.
as at 31st March, 2019
31st
March, 31st
Note 2019 ( ` March,
Particular No. ) 2018 ( `)
2,50,00
(a) Share Capital 0 2,00,000
(b) Reserves and Surplus: Surplus, i.e., Balance in Statement of Profit and 1,83,00
Loss 0 82,000
2. Non-Current Liabilities
Long-term Borrowings:
15% Debentures 80,000 50,000
1,50,00
(a) Trade Payables 0 1,10,000
6,75,00
Total 0 4,62,000
II. ASSETS
2,74,00
(a) Fixed Assets (Tangible) 0 1,17,000
(b) Non-Current Investments 68,000 55,000
2. Current Assets
2,06,00
(a) Inventories 0 1,50,000
(b) Trade Receivables 32,000 70,000
(c) Cash and Cash Equivalents 95,000 70,000
6,75,00
Total 0 4,62,000
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss (1,83,000 – 82,000) 1,01,000
Items to be Added:
Other Current Liabilities (8,000)
Less: Tax Paid –
Purchase of Fixed Assets (1,57,000)
Proceeds from Issue of Equity Share Capital 50,000
Proceeds from Issue of 15% Debentures 30,000
Interest on Debentures (50,000 × 15%) (7,500)
period 70,000
Cash and Cash Equivalents at the end of the period 95,000

Note: It has been assumed that Debentures were issued at the end of the accounting period.
Therefore, interest on Debentures is computed on the opening balance of the Debenture.
Page No 5.104:

Question 41:

Following is the Balance Sheet of Fine Products Ltd. as at 31st March, 2019:

31st 31st
No Marc Marc
te h, h,
No 2019 2018
Particulars . ( `) ( `)
3,50, 3,00,
(a) Share Capital: Equity Share Capital 000 000
57,00 38,00
(b) Reserves and Surplus 1 0 0
53,00 35,00
(a) Trade Payables 0 0
32,00 28,00
(c) Short-term Provisions 2 0 0
4,98, 4,09,
Total 000 000
II. ASSETS
(a) Fixed Assets:
2,48, 2,00,
(i) Tangible Assets 3 000 000
40,00 50,00
(ii) Intangible Assets (Goodwill) 0 0
35,00 10,00
(b) Non-Current Investments 0 0
2. Current Assets
39,00 57,00
(a) Inventories 0 0
1,08, 75,00
(b) Trade Receivables 000 0
28,00 17,00
(c) Cash and Bank Balance 0 0
4,98, 4,09,
Total 000 000

Notes to Accounts
31st 31st
March, March,
2019 2018
1. Reserves and Surplus
General Reserve 30,000 20,000
57,000 38,000
2. Short-term Provisions
3. Tangible Fixed Assets
Land and Building 57,000 1,10,000
Plant and Machinery 1,91,000 90,000
2,48,000 2,00,000

Note: Proposed dividends on equity for the years ended 31st March, 2018 and 2019 are ` 39,000
and ` 45,000 respectively.
You are required to prepare Cash Flow Statement for the year ended 31st March, 2019.
Answer:
Cash Flow Statement
Amount Amount
Items to be Added:
General Reserve 10,000
Goodwill 10,000
Provision for Taxation 32,000
Proposed Dividend 39,000 1,00,000
Operating Profit before Working Capital
Adjustments 1,00,000
Other Current Liabilities (2,000)
Inventories 18,000
Add: Increase in CurrentLiabilities
Purchase of Non-Current Investments (25,000)
Purchase of Plant & Machinery (1,01,000)
Sale of Land & Building 53,000
Proceeds from Issue of Share Capital 50,000
period 17,000
Note: Proposed Dividend treatment is as per AS-4 (Revised).
Page No 5.105:

Question 42:

Prepare a Cash Flow Statement on the basis of the information given in the Balance Sheet of
Libra Ltd. as at 31st March, 2013 and 31st March 2012:

31st 31st
March, March,
Note 2013 2012
(a) Share Capital 8,00,000 6,00,000
Long-term Borrowings 1,00,000 1,50,000
Total 13,40,000 10,98,000
II. ASSETS
1, Non-Current Assets
(a) Fixed Assets:
Tangible Assets 8,50,000 5,60,000
2. Current Assets
(a) Current Investments 50,000 1,34,000
(b) Inventories 76,000 82,000
(c) Trade Receivables 38,000 92,000
(d) Cash and Cash Equivalents 94,000 70,000
Total 13,40,000 10,98,000
Notes to Accounts
31st 31st
March, March,
2013 2012
I. Reserves and Surplus
Answer:
Cash Flow Statement
Details Amount
A Cash from Operating Activities
Net Profit 1,00,000
Operating Profit Before Working Capital
Changes 1,00,000
Inventories 6,000
Trade Payables (8,000) 52,000
Less: Tax Paid -
B Cash From Investing Activities
Purchase of Tangible Assets (2,90,000)
Purchase on Non Current Investment (72,000)
C Cash From Financing Activities
Issue of Share Capital 2,00,000
Long Term Borrowings (50,000)
Net Cash Flow from Financing Activities 1,50,000
D Net Decrease in Cash and Cash Equivalents (60,000)
Add: Cash and Cash Equivalents in the
beginning of the period (70,000 + 1,34,000) 2,04,000
Cash and Cash Equivalents at the end of the
period (94,000 + 50,000) 1,44,000
Page No 5.106:

Question 43:

Following are the Balance Sheets of Solar Power Ltd. as at 31st March, 2014 and 2013:
Solar Power Ltd.
BALANCE SHEET
31st 31st
March, March,
Note 2014 2013
(a) Share Capital 24,00,000 22,00,000

(a) Trade Payables 3,58,000 4,08,000
(b) Short-term Provisions 1,00,000 1,54,000
Total 39,38,000 35,02,000
II. ASSETS
Fixed Assets:
(i) Tangible Assets 2 21,40,000 17,00,000
(ii) Intangible Assets 3 80,000 2,24,000
2. Current Assets
(a) Current Investments 4,80,000 3,00,000
(b) Inventories 2,58,000 2,42,000
(c) Trade Receivables 3,40,000 2,86,000
(d) Cash and Cash Equivalents 6,40,000 7,50,000
Total 39,38,000 35,02,000
Notes to Accounts

2014 2013
1. Revenue and Surplus
2. Tangible Assets
Machinery 25,40,000 20,00,000
Less: Accumulated Depreciation (4,00,000) (3,00,000)
21,40,000 17,00,000
3. Intangible Assets
Goodwill 80,000 2,24,000
During the year, a piece of machinery costing `48,000 on which
accumulated deprciation was ` 32,000. was sold for ` 12,000.
Prepare Cash Flow Statement.
Answer:
Cash Flow Statement
Amount Amount
Items to be Added:
Amortisation of Goodwill 1,44,000
Loss on Sale of Fixed Assets 4,000 2,80,000
Operating Profit before Working Capital
Adjustments 4,80,000
Inventories 16,000
Short-Term Provisions 54,000 1,74,000
Net Cash Generated from Operating Activities 3,06,000
Proceeds from Issue of Share Capital 2,00,000
Proceeds from Long Term Borrowings 1,40,000
Net Increase or Decrease in Cash and Cash
D Equivalents 70,000
Add: Cash and Cash Equivalent in the beginning of
the
period 10,50,000

Wor
king
Note
s:
Machinery Account
Dr. Cr.
Amount Amount
Balance b/d 20,00,000 Bank A/c (Sale) 12,000
Bank A/c Depreciation on Part of
(Purchase- Bal. Fig.) 5,88,000 Machinery 32,000
Profit and Loss A/c
(Loss on Sale) 4,000
25,88,000 25,88,000

Dr. Cr.
Amount Amount
Machinery A/c 32,000 Balance b/d 3,00,000
Balance c/d 4,00,000 during the year- Bal. Fig.) 1,32,000
4,32,000 4,32,000
Page No 5.107:

Question 44:

Following is the Balance Sheet of Mevanca Limited as at 31st March, 2017:
Mevanca Limited BALANCE SHEET
as at 31st March, 2017:
31st 31st
No Marc Marc
te h, h,
No 2017 2016
Particulars . (₹) (₹)
3,00,0 1,00,0
25,00 1,20,0
(b) Reserves and Surplus 1 0 00
80,00 60,00
Long-term Borrowings 2 0 0
20,00
(a) Trade Payables 6,000 0
68,00 70,00
(b) Short-term Provisions 3 0 0
4,79,0 3,70,0
Total 00 00
II. ASSETS
3,36,0 1,92,0
Fixed Assets 4 00 00
2. Current Assets
67,00 60,00
(a) Inventories 0 0
51,00 65,00
25,00 49,00
(c) Cash and Cash Equivalents 0 0
(d) Other Current Assets 4,000
4,79,0 3,70,0
Total 00 00

Notes to Accounts

Particulars 31st 31st

March, March,
2017 2016
(₹) (₹)
Surplus, i.e., Balance in Statement of Profit and Loss 25,000 1,20,000
25,000 1,20,000
2. Long-term Borrowings
10% Long-term Loan 80,000 60,000
80,000 60,000
68,000 70,000
4. Fixed Assets
Machinery 3,84,000 2,15,000
Accumulated Depreciation (48,000) (23,000)
3,36,000 1,92,000

(i) Additional loan was taken on 1st July, 2016.
(ii) Tax of ₹ 53,000 was paid during the year.
Answer:
Cash flow Statement
Amou Amou
nt nt
(95,00
Net Loss as per Statement of Profit and Loss 0)
51,00
Add: Provision for Tax made (WN1) 0
(44,00
Net loss before Tax and Extraordinary Items 0)
25,00
Interest paid on loan (WN2) 7,500
(11,50
Net Loss before Working Capital Changes 0)
14,00
Add: Decrease in Trade Receivables 0
Decrease in other Current Assets 4,000
(14,00
Less: Decrease in Trade Payables 0)
(7,000
Increase In Inventories )
(14,50
Net Loss before Tax 0)
(53,00
Add: Tax to be paid during the year 0)
(67,50
Cash used in Operating Activities 0)
B. Cash Flow from Investing Activities
(1,69,
Purchase of Machinery 000)
(1,69,
Cash used in Investing Activities 000)
C. Cash Flow from Financing Activities
2,00,0
Proceeds from Issue of Shares 00
20,00
Proceeds from additional loan taken 0
(7,500
Interest paid on long-term loan )
2,12,5
Cash flow from Financing Activities 00
(24,00
Net decrease in Cash and Cash Equivalents 0)
49,00
Add: Opening Balance of Cash and Cash Equivalent 0
25,00
Cash and Cash Equivalents at the end of the year 0
Working Notes:
1.
Dr. Provision for Tax A/c Cr.
Amount Amount
2017 2016
March April
31 To Cash A/c- Tax Paid 53,000 01 By balance b/d 70,000
March To balance c/d 68,000 2017
31
March By Statement of Profit &
31 Loss A/c 51,000
1,21,000 1,21,000
2. Interest on Loan
Interest on Loan taken on 1st July, 2016= `. 20,000×10/100×9/12= `. 1,500
Interest on Loan as on 31st March, 2016= `. 60,000×10100= `. 6,000
Total Interest Paid on Loan= `. (6,000+1,500)= `. 7,500
Page No 5.108:

Question 45:

From the following Balance Sheet of Kumar Ltd. as at 31st March, 2019, prepare Cash Flow
Statement:

31st 31st
March, March,
2019 2018
Particulars Note No. ( `) ( `)
16,00,0 10,40,0
(a) Share Capital 1 00 00
5,50,00 2,60,00
(b) Reserves and Surplus, 2 0 0
4,00,00 6,00,00
9% Debentures 0 0
4,50,00 1,00,00
Trade Payables 0 0
30,00,0 20,00,0
Total 00 00
II. ASSETS
20,00,0 15,00,0
Fixed Assets 00 00
2. Current Assets
3,00,00 2,00,00
(a) Inventories 0 0
2,00,00 1,00,00
5,00,00 2,00,00
(c) Cash and Cash Equivalents 0 0
30,00,0 20,00,0
Total 00 00

Notes to Accounts

31st 31st
March March
, 2019 , 2018
1. Share Capital
15,00,0 10,00,0
Equity Share Capital 00 00
1,00,00
7% Preference Share Capital 0 40,000
16,00,0 10,40,0
00 00
4,00,00
General Reserve 0 60,000
Surplus, i.e., Balance in Statement of Profit and 1,50,00 2,00,00
Loss 0 0
5,50,00 2,60,00
0 0
1. During a year, a machinery costing ` 20,000 was sold for ` 6,000.
2. Dividend paid during the year ` 50,000.
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss (1,50,000 – 2,00,000) (50,000)
Transfer to General Reserve 3,40,000
Dividend Paid 50,000
Items to be Added:
Interest Paid 54,000
Inventories (1,00,000)
Trade Receivables (1,00,000)
Trade Payables 3,50,000
Less: Tax Paid –
Proceeds from Issue of Equity Share Capital 5,00,000
Proceeds from 7% Preference Share Capital 60,000
Redemption of 9% Debentures (2,00,000)
Interest Paid (6,00,000 × 9%) (54,000)
D Net Increase in Cash and Cash Equivalents 3,00,000
Add: Cash and Cash Equivalent in the beginning of the period 2,00,000

Working Notes:
Fixed Assets Account
Dr. Cr.
Amount Amount
Bank A/c (Purchase- Bal. Fig.) 5,20,000 Profit and Loss A/c (Loss on Sale) 14,000
20,20,000 20,20,000

Page No 5.109:

Question 46:

Following was the Balance Sheet of M.M. Ltd. as at 31st March, 2015:

Note
(a) Share Capital 5,00,000 4,00,000
(b) Reserves and Surplus 1 2,00,000 (50,000)
Long-term Borrowings 2 4,50,000 5,00,000
(a) Short-term Borrowings 3 1,50,000 50,000
(b) Short-term Provisions 4 70,000 90,000
Total 13,70,000 9,90,000
II. ASSETS
(a) Fixed Assets:
(ii) Intangible Assets 6 20,000 30,000
(b) Non-Current Investments 1,00,000 75,000
2. Current Assets
(a) Current Investments 50,000 60,000
(b) Inventories 7 1,07,000 45,000
Total 13,70,000 9,90,000
Notes to Accounts

31st Mar 31st Mar
ch 2015 ch 2014
1
. Reserves and Surplus
Profit and Loss 2,00,000 (50,000)
2,00,000 (50,000)
2
. Long-term Borrowings
12% Debentures 4,50,000 5,00,000
4,50,000 5,00,000
3
. Short-term Borrowings
Bank Overdraft 1,50,000 50,000
1,50,000 50,000
4
. Short-term Provisions
70,000 90,000
5
. Tangible Assets
12,03,00
Machinery 0 8,21,000
(2,00,00 (1,01,00
Less: Accumulated Depreciation 0) 0)
10,03,00
0 7,20,000
6
. Intangible Assets
Goodwill 20,000 30,000
20,000 30,000
7
. Inventories
Stock-in-Trade 1,07,000 45,000
1,07,000 45,000
1. 12% Debentures were redeemed on 31st March, 2015.
2. Tax ` 70,000 was paid during the year.
Answer:
Cash Flow Statement
Amount Amount
I Cash Flow from Operating Activities
A. Net Profit before Tax and Extraordinary items* 2,50,000
Adjustments for Non-cash and Non-operating items
B. Add: Items to be Added
Depreciation 99,000
Intangible Assets Written off 10,000
Interest on Debentures (12% of 5,00,000) 60,000
Provision for Tax 50,000 2,19,000
C. Less: Items to be Deducted
D.Operating Profit before Working Capital Adjustments (A + B
– C) 4,69,000
E. Add: Decrease in Current Assets and Increase in Current
Liabilities
F. Less: Increase in Current Assets and Decrease in Current
Liabilities
Inventories 62,000 (62,000)
Cash Generated from Operations (D + E – F) 4,07,000
Less: Income Tax Paid (Net of Refund) 70,000 (70,000)
Net Cash Flows from (or used in) Operating Activities 3,37,000
II Cash Flow from Investing Activities
Purchase of Fixed Assets (12,03,000 – 8,21,000) (3,82,000)
Net Cash Flows from (or used in) Investing Activities (4,07,000)
III Cash Flow from Financing Activities
Redemption of Debentures (50,000)
Interest Paid on Debentures (60,000)
Increase in Bank Overdraft 1,00,000
IV Net Increase or Decrease in Cash and Cash Equivalents (I + II + III) 20,000
(Includes Current Investments of ` 60,000)


Dr. Cr.
Amount Amount
Bank A/c 70,000 Balance b/d 90,000
Balance c/d 70,000 Statement of Profit and Loss 50,000
1,40,000 1,40,000
Page No 5.110:

Question 47:

The Balance Sheet of Virendra Paper Ltd. as at 31st March, 2019 is given below:

31st 31st
March, March,
Note 2019 2018
Particulars ulars No. ( `) ( `)
(a) Share Capital 7,20,000 6,00,000
(b) Reserves and Surplus:
Surplus i.e., Balance in Statement of Profit and Loss 4,80,000 3,75,000
10% Debentures 2,70,000 4,50,000
Total 15,90,000 15,15,000
II. ASSETS
Fixed Assets (Tangible) 1 7,50,000 7,20,000
2. Current Assets
(a) Inventories 3,60,000 4,20,000
(b) Trade Receivables 3,00,000 2,25,000
(c) Cash and Cash Equivalents 1,80,000 1,50,000
Total 15,90,000 15,15,000

Notes to Accounts

31st 31st
March March
, 2019 , 2018
1. Fixed Assets (Tangible)
2,40,00 3,00,00
Land 0 0
31st Marc 31st Marc
h, h,
2019 ( `) 2018 ( `)
Less: Accumulated Depreciation 2,40,000 1,80,000
5,10,00 4,20,00
5,10,000 4,20,000 0 0
7,50,00 7,20,00
0 0

1. Interim Dividend of `75,000 has been paid during the year.
2. Debenture Interest paid during the year ` 27,000.
You are required to prepare Cash Flow Statement.
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss (4,80,000 –
3,75,000) 1,05,000
Items to be Added:
Interest Paid on Debentures 27,000
Depreciation 60,000
Inventories 60,000
Cash Generated from operations 2,82,000
Less: Tax Paid –
Sale of Land 60,000
Interim Dividend Paid (75,000)
D Net Increase in Cash and Cash Equivalents 30,000
period 1,50,000
Page No 5.111:

Question 48:

Following are the Balance Sheets of Krishtec Ltd. for the years ended 31st March 2012 and
2011:

31st 31st
March, March,
Note 2012 2011
(a) Share Capital 12,00,000 8,00,000
(b) Reserves and Surplus (Surplus, i.e., Balance in Statement of
Profit and Loss) 3,50,000 4,00,000
Total 20,50,000 16,00,000
II. ASSETS
Fixed Assets:
2. Current Assets
(a) Inventories 2,00,000 1,00,000
Total 20,50,000 16,00,000

Prepare a Cash Flow Statement after taking into account the following adjustments:
(a) The company paid Interest `36,000 on its long-term borrowings.
(b) Depreciation charged on tangible fixed assets was `1,20,000
Answer:
Cash Flow Statement
Particulars Amount Amount
( `) ( `)
Profit as per Statement of Profit and Loss (50,000)
Items to be Added:
Interest 36,000 1,56,000
(1,00,000
Inventories )
Add:Increase in CurrentLiabilities
Trade Payables 10,000 (1,70,000)
Cash Generated from Operations (64,000)
Less: Tax Paid NIL
Net Cash Flows from Operating Activities (64,000)
Purchase of Tangible Fixed Assets (4,20,000)
Proceeds from Long Term Borrowings 90,000
D Net Increase or Decrease in Cash and Cash Equivalents (30,000)

Tangible Fixed Assets Account
Dr. Cr.
Amount Amount
Balance b/d 9,00,000 Depreciation A/c 1,20,000
Bank A/c (Bal. Fig.) 4,20,000 Balance c/d 12,00,000
13,20,000 13,20,000
Page No 5.111:

Question 49:

From the following Balance Sheet of JY Ltd. as at 31st March 2017, prepare a Cash Flow
Statement:
BALANCE SHEET
31st
Not 31st March,
e March, 2016 (₹
Particular No. 2017 (₹) )
5,00,00
(a) Share Capital 5,00,000 0
1,50,00
Long-term Borrowings 2 2,50,000 0
1,10,00
(a) Short-term Borrowings 3 1,50,000 0
(b) Short-term Provisions 4 1,25,000 75,000
11,25,00 8,00,00
Total 0 0
II. ASSETS
4,50,00
Fixed Assets Tangible 5 6,00,000 0
2. Current Assets
2,25,00
(a) Trade Receivables 2,75,000 0
(b) Cash and Cash Equivalents 50,000 25,000
1,00,00
(c) Short-term Loans and Advances 2,00,000 0
11,25,00 8,00,00
Total 0 0
Notes to Accounts
Particular 31st March 31st March

, ,
2017 2016
(₹) (₹)
1
Loss 1,00,000 (25,000)
1,00,000 (25,000)
2
10% Debentures 2,50,000 1,50,000
2,50,000 1,50,000
3
Bank Overdraft 1,50,000 1,00,000
1,50,000 1,00,000
4
Provision for Tax 1,25,000 75,000
1,25,000 75,000
5
. Tangible Assets
Machinery 7,37,500 5,25,000
Accumulated Depreciation (1,37,500) (75,000)
6,00,000 4,50,000
Note: Proposed Dividend for the years ended 31st March, 2016 and 2017 are `.
50,000 and `. 75,000 respectively.
Additional Information: `. 1,00,000, 10% Debentures were issued on 31st March, 2017.
Answer:
Cash flow Statement
Amou Amou
nt nt
Closing Balance of Surplus i.e. Statement of Profit and 1,00,0
Loss 00
Less: Opening Balance of Surplus i.e. Statement of Profit (25,00
and Loss 0)
1,25,0
00
1,25,0
50,00
Proposed Dividend paid as on 31st March, 2016 0
3,00,0
Net Profit before tax and extraordinary items 00
62,50
15,00
Interest paid on 10% debentures 0
3,77,5
Net Profit before Working Capital changes 00
(50,00
Less: Increase in Trade Receivables 0)
3,27,5
Net Profit before tax 00
75,00
2,52,5
Cash flow from Operating Activities 00
(2,12,
(1,00,
Short term loans and advances given 000)
(3,12,
C. Cash flow from Financing activities
1,00,0
Proceeds from issue of 10% debentures 00
50,00
Increase in the Bank Overdraft 0
(15,00
Interest paid on debentures 0)
(50,00
Proposed Dividend paid 0)
85,00
Cash flow from financing activities 0
25,00
Net Increase in Cash and Cash Equivalents 0
Add: Cash and Cash Equivalents at the beginning of the 25,00
year 0
Cash and Cash Equivalents at the end of the year 50,00
0
Note: Proposed Dividend Treatment is as per AS-4.
Page No 5.112:

Question 50:

Prepare Cash Flow Statement from the following Balance Sheet:

31st 31st
March, March,
Note 2013 2012
(a) Share Capital 6,00,000 5,00,000
(a) Trade Payables 2,80,000 1,80,000
Total 12,80,000 8,80,000
II. ASSETS
(a) Fixed Assets:
2. Current Assets
(a) Inventories 1,00,000 1,50,000
Total 12,80,000 8,80,000

Notes to Accounts

Particulars 31st 31st

March, March,
2013 2012
( `) ( `)

(i) An old machinery having book value of `50,000 was sold for `60,000.
(ii) Depreciation provided on Machinery during the year was `30,000.
Answer:
Cash Flow Statement
Details Amount
Net Profit 2,00,000
Add: Non Operating Expenses
Less: Non Operating Incomes
Profit on Sale of Machinery (10,000) 20,000
Changes 2,20,000
Inventories 50,000
Trade Receivables (2,00,000) (50,000)
Less: Tax Paid -
Add: Cash and Cash Equivalents in beginning
of the period 30,000
period 80,000

Working Notes:
Dr. Cr.
Amount Amount
Date Particulars J.F. ( `) Date Particulars J.F. ( `)
P & L ( Profit) 10,000 Bank ( Sale) 60,000
Purchases (bf) 2,80,000 Balance c/d 5,00,000
5,90,000 5,90,000

Page No 5.109:

Question 46:

Following was the Balance Sheet of M.M. Ltd. as at 31st March, 2015:

Note
(a) Share Capital 5,00,000 4,00,000
(a) Short-term Borrowings 3 1,50,000 50,000
(b) Short-term Provisions 4 70,000 90,000
Total 13,70,000 9,90,000
II. ASSETS
(a) Fixed Assets:
2. Current Assets
(b) Inventories 7 1,07,000 45,000
Total 13,70,000 9,90,000
Notes to Accounts

31st Mar 31st Mar
ch 2015 ch 2014
1
Profit and Loss 2,00,000 (50,000)
2,00,000 (50,000)
2
12% Debentures 4,50,000 5,00,000
4,50,000 5,00,000
3
Bank Overdraft 1,50,000 50,000
1,50,000 50,000
4
70,000 90,000
5
. Tangible Assets
12,03,00
Machinery 0 8,21,000
(2,00,00 (1,01,00
Less: Accumulated Depreciation 0) 0)
10,03,00
0 7,20,000
6
. Intangible Assets
Goodwill 20,000 30,000
20,000 30,000
7
. Inventories
Stock-in-Trade 1,07,000 45,000
1,07,000 45,000
1. 12% Debentures were redeemed on 31st March, 2015.
2. Tax ` 70,000 was paid during the year.
Answer:
Cash Flow Statement
Amount Amount
I Cash Flow from Operating Activities
A. Net Profit before Tax and Extraordinary items* 2,50,000
Adjustments for Non-cash and Non-operating items
B. Add: Items to be Added
Depreciation 99,000
Intangible Assets Written off 10,000
Interest on Debentures (12% of 5,00,000) 60,000
C. Less: Items to be Deducted
D.Operating Profit before Working Capital Adjustments (A + B
– C) 4,69,000
E. Add: Decrease in Current Assets and Increase in Current
Liabilities
F. Less: Increase in Current Assets and Decrease in Current
Liabilities
Inventories 62,000 (62,000)
Cash Generated from Operations (D + E – F) 4,07,000
Less: Income Tax Paid (Net of Refund) 70,000 (70,000)
Net Cash Flows from (or used in) Operating Activities 3,37,000
II Cash Flow from Investing Activities
Purchase of Fixed Assets (12,03,000 – 8,21,000) (3,82,000)
Net Cash Flows from (or used in) Investing Activities (4,07,000)
III Cash Flow from Financing Activities
Redemption of Debentures (50,000)
Increase in Bank Overdraft 1,00,000
IV Net Increase or Decrease in Cash and Cash Equivalents (I + II + III) 20,000


Dr. Cr.
Amount Amount
Bank A/c 70,000 Balance b/d 90,000
Balance c/d 70,000 Statement of Profit and Loss 50,000
1,40,000 1,40,000
Page No 5.110:

Question 47:

The Balance Sheet of Virendra Paper Ltd. as at 31st March, 2019 is given below:

31st 31st
March, March,
Note 2019 2018
(a) Share Capital 7,20,000 6,00,000
(b) Reserves and Surplus:
10% Debentures 2,70,000 4,50,000
Total 15,90,000 15,15,000
II. ASSETS
Fixed Assets (Tangible) 1 7,50,000 7,20,000
2. Current Assets
(a) Inventories 3,60,000 4,20,000
Total 15,90,000 15,15,000

Notes to Accounts

31st 31st
March March
, 2019 , 2018
1. Fixed Assets (Tangible)
2,40,00 3,00,00
Land 0 0
31st Marc 31st Marc
h, h,
2019 ( `) 2018 ( `)
5,10,00 4,20,00
5,10,000 4,20,000 0 0
7,50,00 7,20,00
0 0

1. Interim Dividend of `75,000 has been paid during the year.
2. Debenture Interest paid during the year ` 27,000.
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss (4,80,000 –
3,75,000) 1,05,000
Items to be Added:
Interest Paid on Debentures 27,000
Depreciation 60,000
Inventories 60,000
Less: Tax Paid –
Sale of Land 60,000
Interim Dividend Paid (75,000)
period 1,50,000
Page No 5.111:

Question 48:

Following are the Balance Sheets of Krishtec Ltd. for the years ended 31st March 2012 and
2011:

31st 31st
March, March,
Note 2012 2011
(a) Share Capital 12,00,000 8,00,000
(b) Reserves and Surplus (Surplus, i.e., Balance in Statement of
Profit and Loss) 3,50,000 4,00,000
Total 20,50,000 16,00,000
II. ASSETS
Fixed Assets:
2. Current Assets
(a) Inventories 2,00,000 1,00,000
Total 20,50,000 16,00,000

Prepare a Cash Flow Statement after taking into account the following adjustments:
(a) The company paid Interest `36,000 on its long-term borrowings.
(b) Depreciation charged on tangible fixed assets was `1,20,000
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss (50,000)
Items to be Added:
Interest 36,000 1,56,000
(1,00,000
Inventories )
Add:Increase in CurrentLiabilities
Trade Payables 10,000 (1,70,000)
Cash Generated from Operations (64,000)
Less: Tax Paid NIL
Net Cash Flows from Operating Activities (64,000)
Purchase of Tangible Fixed Assets (4,20,000)
Proceeds from Long Term Borrowings 90,000
D Net Increase or Decrease in Cash and Cash Equivalents (30,000)

Tangible Fixed Assets Account
Dr. Cr.
Amount Amount
Balance b/d 9,00,000 Depreciation A/c 1,20,000
Bank A/c (Bal. Fig.) 4,20,000 Balance c/d 12,00,000
13,20,000 13,20,000
Page No 5.111:

Question 49:

From the following Balance Sheet of JY Ltd. as at 31st March 2017, prepare a Cash Flow
Statement:
BALANCE SHEET
31st
Not 31st March,
e March, 2016 (₹
Particular No. 2017 (₹) )
5,00,00
(a) Share Capital 5,00,000 0
1,50,00
Long-term Borrowings 2 2,50,000 0
1,10,00
(a) Short-term Borrowings 3 1,50,000 0
11,25,00 8,00,00
Total 0 0
II. ASSETS
4,50,00
Fixed Assets Tangible 5 6,00,000 0
2. Current Assets
2,25,00
(a) Trade Receivables 2,75,000 0
(b) Cash and Cash Equivalents 50,000 25,000
1,00,00
(c) Short-term Loans and Advances 2,00,000 0
11,25,00 8,00,00
Total 0 0
Notes to Accounts
, ,
2017 2016
Particular (₹) (₹)
1
Loss 1,00,000 (25,000)
1,00,000 (25,000)
2
10% Debentures 2,50,000 1,50,000
2,50,000 1,50,000
3
Bank Overdraft 1,50,000 1,00,000
1,50,000 1,00,000
4
Provision for Tax 1,25,000 75,000
1,25,000 75,000
5
. Tangible Assets
Machinery 7,37,500 5,25,000
Accumulated Depreciation (1,37,500) (75,000)
6,00,000 4,50,000
Note: Proposed Dividend for the years ended 31st March, 2016 and 2017 are `.
50,000 and `. 75,000 respectively.
Additional Information: `. 1,00,000, 10% Debentures were issued on 31st March, 2017.
Answer:
Cash flow Statement
Amou Amou
nt nt
Closing Balance of Surplus i.e. Statement of Profit and 1,00,0
Loss 00
Less: Opening Balance of Surplus i.e. Statement of Profit (25,00
and Loss 0)
1,25,0
00
1,25,0
50,00
Proposed Dividend paid as on 31st March, 2016 0
3,00,0
Net Profit before tax and extraordinary items 00
62,50
15,00
Interest paid on 10% debentures 0
3,77,5
Net Profit before Working Capital changes 00
(50,00
Less: Increase in Trade Receivables 0)
3,27,5
Net Profit before tax 00
75,00
2,52,5
Cash flow from Operating Activities 00
(2,12,
(1,00,
Short term loans and advances given 000)
(3,12,
C. Cash flow from Financing activities
1,00,0
Proceeds from issue of 10% debentures 00
50,00
Increase in the Bank Overdraft 0
(15,00
Interest paid on debentures 0)
(50,00
Proposed Dividend paid 0)
85,00
Cash flow from financing activities 0
25,00
Net Increase in Cash and Cash Equivalents 0
Add: Cash and Cash Equivalents at the beginning of the 25,00
year 0
50,00
Cash and Cash Equivalents at the end of the year 0
Note: Proposed Dividend Treatment is as per AS-4.
Page No 5.112:

Question 50:

Prepare Cash Flow Statement from the following Balance Sheet:

31st 31st
March, March,
Note 2013 2012
(a) Share Capital 6,00,000 5,00,000
(a) Trade Payables 2,80,000 1,80,000
Total 12,80,000 8,80,000
II. ASSETS
(a) Fixed Assets:
2. Current Assets
(a) Inventories 1,00,000 1,50,000
Total 12,80,000 8,80,000

Notes to Accounts

31st 31st
March, March,
2013 2012

(i) An old machinery having book value of `50,000 was sold for `60,000.
(ii) Depreciation provided on Machinery during the year was `30,000.
Answer:
Cash Flow Statement
Details Amount
Net Profit 2,00,000
Add: Non Operating Expenses
Less: Non Operating Incomes
Profit on Sale of Machinery (10,000) 20,000
Changes 2,20,000
Inventories 50,000
Trade Receivables (2,00,000) (50,000)
Less: Tax Paid -
Add: Cash and Cash Equivalents in beginning
of the period 30,000
period 80,000

Working Notes:
Dr. Cr.
Amount Amount
Date Particulars J.F. ( `) Date Particulars J.F. ( `)
P & L ( Profit) 10,000 Bank ( Sale) 60,000
Purchases (bf) 2,80,000 Balance c/d 5,00,000
5,90,000 5,90,000

Page No 5.113:
Question 51:
Following is the summarised Balance Sheet of Philips India Ltd. as at 31st March 2018:
31st 31st
March, March,
Note 2018 2017
(a) Share Capital 13,50,000 13,50,000
Long-term Borrowings: 10% Mortgage Loan 8,10,000 ...
(a) Trade Payables (Creditors) 4,20,000 5,04,000
(b) Short-term Provisions:
Total 37,26,000 31,47,000
II. ASSETS
(a) Fixed Assets (Tangible) 9,60,000 12,00,000
2. Current Assets
(b) Inventories 63,30,000 7,82,000
Total 37,26,000 31,47,000
Notes to Accounts
31st 31st
March, March,
2018 2017
11,34,000 10,68,000
1. Investments costing ` 24,000 were sold during the year for ` 25,5000.
2. Provistion for Tax made during the year was ` 27,000.
3. During the year, a part of the Fixed Assets costing ` 30,000 was sold for ` 36,000.
The rofits were included in the Statement of Profit and Loss.
4. The Interim Dividend paid during the year amounted to ` 1,20,000.
Answer:
Cash Flow Statement
Amount Amount
Interim Dividend 1,20,000
Items to be Added:
Profit on Sale of Investments (1,500)
Profit on Sale of Fixed Assets (6,000)
Trade Payables (1,02,000)
Inventories 90,000
Cash Generated from Operations (3,31,500)
Less: Tax Paid (2,22,000)
Net Cash from (used in) Operating Activities (5,53,500)
Sale of Investments 25,500
Sale of Fixed Assets 36,000
Net Cash Flow from Investing Activities 7,500
Proceeds from Issue of 10% Mortgage Loan 8,10,000
Interim Dividend Paid (1,20,000)
Working Notes:
WN1
Dr. Cr.
Amount Amount
Profit and Loss A/c (Profit on Sale) 6,000 Depreciation (Bal. Fig.) 2,10,000
12,06,000 12,06,000
WN2
Investments Account
Dr. Cr.
Amount Amount
Profit and Loss A/c (Profit on Sale) 1,500 Balance c/d 1,80,000
Bank A/c (Purchases- Bal. Fig.) 54,000
2,05,500 2,05,500
WN 3
Provision for Taxation Account
Dr. Cr.
Amount Amount
Bank A/c (Tax Paid- Bal. Fig.) 2,22,000 Balance b/d 2,25,000
Balance c/d 30,000 Profit and Loss A/c 27,000
2,52,000 2,52,000
Page No 5.114:
Question 52:
From the following Balance Sheet, prepare Cash Flow Statement:
31st 31st
March, March,
Note 2019 2018
2,50,00 2,00,00
(b) Reserves and Surplus, 1 90,600 80,500
(a) Short-term Borrowings: Bank Loan ... 70,000
1,35,20 1,50,00
(b) Trade Payables 0 0
(c) Short-term Provisions: Provision for Tax 35,000 30,000
5,10,80 5,30,50
Total 0 0
II. ASSETS
Fixed Assets:
3,59,00 3,50,00
(i) Tangible Assets 2 0 0
(ii) Intangible Assets: Goodwill 5,000 ...
2. Current Assets
1,00,00
(a) Inventories 74,000 0
(b) Trade Receivables 64,200 80,000
(c) Cash and Cash Equivalents 8,600 500
5,10,80 5,30,50
Total 0 0
Notes to Accounts
31st 31st
March March
, 2019 , 2018
90,600 80,500
2. Tangible Assets
1,90,0 2,00,0
Land and Building 00 00
1,69,0 1,50,0
Plant and Machinery 00 00
3,59,0 3,50,0
00 00
1. Proposed Dividend for the year ended 31st March, 2019 was ` 25,000 and for the year ended
31st March, 2018 was ` 14,000.
2. Interim Dividend paid during the year was ` 9,000.
3. Income Tax paid during the year was ` 28,000.
4. Machinery was purchased during the year ` 33,000.
5. Depreciation to be charged on machinery ` 14,000 and building ` 10,000.
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss (30,600 – 30,500) 100
Proposed Dividend 23,000
Items to be Added:
Depreciation on Building 10,000
Inventories 26,000
Purchase of Goodwill (5,000)
Net Cash from (used in) Investing Activities (38,000)
Proceeds from Issue of Equity Shares 50,000
Net Cash Used in Financing Activities (43,000)
Add: Cash and Cash Equivalent in the beginning of the period 500
Working Notes:
WN1
Machinery Account
Dr. Cr.
Amount Amount
Bank A/c (Purchases- Bal. Fig.) 33,000 Balance c/d 1,69,000
1,83,000 1,83,000
WN2
Dr. Cr.
Amount Amount
Bank A/c (Tax Paid) 28,000 Balance b/d 30,000
Balance c/d 35,000 Profit and Loss A/c (Bal. Fig.) 33,000
63,000 63,000
Page No 5.115:
Question 53:
From the following Balance Sheet of Akash Ltd. as at 31st March 2014:
31st
March, 31 March,
2014 2013
Particulars Note No. ( `) ( `)
I. EQUITY AND LIABILITES
(a) Share Capital 15,00,000 14,00,000
(a) Short-term Borrowings 2 12,000 10,000
(b) Trade Payables 15,000 83,000
Total 19,95,000 17,39,000
II. ASSETS
Fixed Assets:
2. Current Assets
(c) Trade Receivables 26,000 23,000
Total 19,95,000 17,39,000

Notes to Accounts :
31st
March, 31st March,
Particulars 2014 ( `) 2013 ( `)
2. Short-term Borrowings :
Bank Overdraft 12,000 10,000
4. Tangible Assets :
Machinery 20,00,000 17,00,000
Less: Accumulated Depreciation (1,40,000) (90,000)
18,60,000 16,10,000
Patents 50,000 30,000
Additional Information :
(i) Tax paid during the year amounted to ` 16,000.
(ii) machine with a net book value of ` 10,000 (Accumulated Depreciation ` 40,000) was sold
for ` 2,000.
Answer:
Cash Flow Statement
Amount Amount
Items to be Added:
Depreciation 90,000
Loss on Sale of Fixed Assets 8,000 98,000
Inventory 22,000 (49,000)
Purchase of Patents (20,000)
Proceeds from Long term Borrowings 75,000
Raise of Bank Overdraft 2,000
Add: Cash and Cash Equivalent in the beginning of the period
(12,000+5,000) 17,000
Cash and Cash Equivalents at the end of the period (14,000+8,000) 22,000
Working Notes:
WN
1:
Dr. Cr.
Amount Amount
Bank A/c (Purchase- Bal. Fig.) 3,50,000 Accumulated Depreciation 40,000
20,50,000 20,50,000

WN
2:
Dr. Cr.
Amount Amount
Fixed Assets A/c 40,000 Balance b/d 90,000
Balance c/d 1,40,000 during the year- Bal. Fig.) 90,000
1,80,000 1,80,000

WN
3:
Dr. Cr.
Amount Amount
Bank A/c (Tax Paid) 16,000 Balance b/d 11,000
Balance c/d 18,000 Profit and Loss A/c (Bal. Fig.) 23,000
34,000 34,000

Page No 5.116:
Question 54:
From the following Balance Sheet of SRS Ltd. and the additional information as on 31st March,
2016, prepare a Cash Flow Statement:
SRS Ltd.
BALANCE SHEET as on 31st March, 2016

31st 31st
March, March,
Note 2016 2015
(a) Share Capital 4,50,000 3,50,000
(b) Reserves and Surplus 1 1,25,000 50,000
(a) Short-term Borrowings 3 75,000 37,500
Total 9,75,000 6,75,000
II. ASSETS
(a) Fixed Assets:
(i) Tangible 5 7,32,500 4,52,500
(ii) Intangible 6 50,000 75,000
(b) Non-current Investments 75,000 50,000
2. Current Assets
(b) Inventories 7 61,000 36,000
Total 9,75,000 6,75,000
Notes to Accounts
31st March 31st M
2016 20
Particular ( `) (
Surplus, i.e., Balance in Statement of Profit and Loss 1,25,000
2. Long-term Borrowings
12% Debentures 2,25,000 1,
3. Short-term Borrowings
Bank Overdraft 75,000
5. Tangible Assets
Machinery 8,37,500 5,
Accumulated Depreciation (1,05,000) (7
7,32,500 4,
Goodwill 50,000
7. Inventories
Stock-in-Trade 61,000

(i) `50,000, 12% Debentures were issued on 31st March, 2016.
(ii) During the year, a piece of machinery costing `40,000, on which accumulated depreciation
was `20,000, was sold at a loss of `5,000.
Answer:
Cash Flow Statement
Amount Amount
Provision for Tax 1,00,000 1,75,000
Items to be Added:
Goodwill written off 25,000
Debentures Interest 21,000
Depreciation 55,000
Loss on Sale of Machinery 5,000 1,06,000
Inventories (25,000) (25,000)
Sale of machinery 15,000
Purchase of machinery (3,55,000)
Purchase of non-current investment (25,000) (3,65,000)
Increase in Bank Overdraft 37,500
Interest on Debentures paid (21,000)
Proceeds from Issue of Debentures 50,000
D Net ↑/↓ in Cash and Cash Equivalents (A+B+C) (5,000)
(26,500+35,000) 61,500
Cash and Cash Equivalents at the end of the period
(36,500+20,000) 56,500

Working Notes:
Machinery Account
Dr. Cr.
Amount Amount
Bank A/c Accumulated
(Purchase- Bal. Fig.) 3,55,000 Depreciation A/c 20,000
Profit and Loss A/c 5,000
(Loss on Sale)
8,77,500 8,77,500

Dr. Cr.
Amount Amount
Machinery A/c 20,000 Balance b/d 70,000
Profit and Loss A/c
(Dep. charged during
Balance c/d 1,05,000 the year- Bal. Fig.) 55,000
1,25,000 1,25,000
Page No 5.117:

Question 55:
From the following Balance Sheet of Mishi Ltd. as at 31st March, 2019, prepare Cash Flow
Statement:

31st 31st
March, March,
Note 2019 2018
(a) Share Capital 16,00,000 12,00,000
Long-term Borrowings (10% Debentures) 3,20,000 2,00,000
(a) Short-term Borrowing (Bank Loan) 80,000 1,10,000
(b) Trade Payables 1,50,000 1,80,000
Total 28,10,000 21,30,000
II. ASSETS
(a) Fixed Assets−Tangible 2 19,00,000 12,10,000
2. Current Assets
(a) Current Investments 1,60,000 80,000
(c) Cash and Cash Equivalents 3 3,00,000 2,40,000
Total 28,10,000 21,30,000

Notes to Accounts :
31st 31st
March, March,
2019 2018
1. Reserves and Surplus :
Surplus i.e., Balance in the Statement of Profit and Loss 3,40,000 2,00,000
6,60,000 4,40,000
2. Fixed Assets−Tangible
Machinery (Cost) 21,40,000 14,00,000
19,00,000 12,10,000
3. Cash and Cash Equivalents
Cash in Hand 1,40,000 1,10,000
Bank Balance 1,60,000 1,30,000
3,00,000 2,40,000

(i) During the year, Machinery costing ` 1,40,000 (accumulated depreciation provided
thereon ` 1,10,000) was sold for ` 20,000.
(ii) During the year, Non-current Investments costing ` 80,000 were sold at a profit of ` 16,000.
Answer:
Cash Flow Statement
Particulars Amount Amount
( `) ( `)
Items to be Added:
Debentures Interest 20,000
Loss on Sale of Fixed Assets 10,000
Profit on sale of Investment (16,000) 1,74,000
Less: Tax Paid -
Sale of Non-Current Investment 96,000
Purchase of Non-Current Investment (1,50,000)
Proceeds from Issue of issue of Debentures 1,20,000
Security Premium Reserve 20,000
D Net Increase Decrease in Cash and Cash Equivalents 1,40,000
period (1,10,000+1,30,000+80,000) 3,20,000
(1,40,000+1,60,000+1,60,000) 4,60,000
Working Notes:
WN
1:
Dr. Cr.
Amount Amount
Bank A/c (Purchase- Bal. Fig.) 8,80,000 Accumulated Depreciation 1,10,000
Profit and Loss A/c (Loss on
Sale) 10,000
22,80,000 22,80,000

WN
2:
Dr. Cr.
Amount Amount
Fixed Assets A/c 1,10,000 Balance b/d 1,90,000
Balance c/d 2,40,000 during the year- Bal. Fig.) 1,60,000
3,50,000 3,50,000

WN
3:
Non-Current Investment Account
Dr. Cr.
Amount Amount
Bank A/c (Sale)
Balance b/d 2,00,000 (80,000+16,000) 96,000
Profit and Loss A/c (Profit on
Sale) 16,000 Balance c/d 2,70,000
Bank A/c (Purchase- Bal. Fig.) 1,50,000
3,66,000 3,66,000

Page No 5.118:

Question 56:

From the following Balance Sheet and information of Sun Ltd., prepare Cash Flow Statement:

Particulars Note 31st 31st

March, March,
2019 2018
No. ( `) ( `)
(a) Share Capital 1 7,00,000 6,00,000
Long-term Borrowings: 10% Debentures 3,00,000 2,00,000
(a) Trade Payables 1,40,000 60,000
Total 15,50,000 10,60,000
II. ASSETS
(a) Fixed Assets−Tangible 7,00,000 6,00,000
(b) 10% Investments 2,00,000 1,00,000
2. Current Assets
(b) Inventories 2,00,000 1,00,000
(c) Trade Receivables 3 2,80,000 1,90,000
Total 15,50,000 10,60,000

Notes to Accounts :
31st 31st
March, March,
2019 2018
1. Share Capital
7,00,000 6,00,000
4,10,000 2,00,000
3. Trade Receivables
Sundry Debtors 3,00,000 2,00,000
Less: Provision for Doubtful Debts 20,000 10,000
2,80,000 1,90,000

You are informed that during the year:

(i) Proposed Dividend: 31st March, 2019 31st March, 2018

Equity Share Capital Nil Nil
Preference Share Capital 10% 10%
(ii) A machine with a book value of ` 90,000 was sold for ` 50,000;

(iii) Depreciation charged during the year ` 60,000;
(iv) Debentures were issued on 1st April, 2018;
(v) Investments were purchased on 31st March, 2019;
(vi) Preference shares were redeemed on 31st December,2018;
(vii) An interim dividend @ 15% was paid on equity shares on 31st December, 2018;
(viii) Fresh equity shares were issued at a premium of 5% on 31st March, 2019.
Answer:
Cash Flow Statement
Amount Amount
Preference Dividend (3,00,000×10100)W.N.-1 30,000
Items to be Added:
Loss on Fixed Assets 40,000
Dividend on Equity Shares 45,000
Provision for Doubtful Debts 10,000
Interest on Investment (10,000) 1,75,00
Inventories (1,00,000) (2,00,00
Less: Tax Paid
Purchase of Investment (1,00,000)
Interest on Investment 10,000
Net Cash Used in Investing Activities (2,90,00
Interest on Debentures Paid (30,000)
Dividend Paid on Preference Share Capital (30,000)
Dividend Paid on Equity Share Capital (45,000)
(50,000+20,000) 70,00
Cash and Cash Equivalents at the end of the period (90,000+80,000) 1,70,00
Working Notes:

(1) Dividend on 10% Preference Shares has been calculated on the value as on 31st March, 2018
as `1,00,000 Preference Shares were redeemed on 31st December, 2018.

(2)

Dr. Cr.
Amount Amount
Bank A/c (Purchase- Bal. Fig.) 2,50,000 Depreciation 60,000
8,50,000 8,50,000
Page No 5.119:

Question 57:

From the following Balance Sheet and information of Volvo Ltd., prepare Cash Flow Statement:

31st 31st
March, March,
Note 2019 2018
(a) Share Capital 1 2,25,000 2,50,000
(b) Reserves and Surplus 2 1,27,500 50,000
Long-term Borrowings: 10% Debentures 1,00,000 50,000
(b) Other Current Liabilities−Premium on Redemption of Preference
Shares 2,500 5,000
Total 5,27,500 3,90,000
II. ASSETS
(a) Fixed Assets−Tangible 3,10,000 2,55,000
(b) Non-Current Investments (10% Investments) 40,000 15,000
2. Current Assets
(c) Trade Receivables 3 92,500 45,000
(d) Cash and Cash Equivalents 4 35,000 21,000
Total 5,27,500 3,90,000

Notes to Accounts

31st 31st
March, March,
2019 2018
1. Share Capital
12% Preference Share Capital 50,000 1,00,000
2,25,000 2,50,000
Loss 1,17,500 35,000
1,27,500 50,000
3. Trade Receivables
Sundry Debtors 1,00,000 50,000
Less: Provision for Doubtful Debts 7,500 5,000
92,500 45,000
Cash in Hand 12,500 6,000
Cash in Bank 22,500 15,000
35,000 21,000

(i) You are informed during the year:


2019 2018
Proposed Dividend ( `) ( `)
Equity Share Capital NIL NIL
Preference Share Capital 12% 12%

(ii) A machine with a book value of `20,000 was sold for `12,500;
(iii) Depreciation charged during the year was `35,000;
(iv) Preference shares were redeemed on 31st March, 2018 at a premium of 5%;
(v) An Interim dividend of `5,000 was paid on equity shares on 31st March, 2019 out of General
Reserve;
(vi) Fresh equity shares were Issued on 31st March, 2019; and
(vii) Additional Investments were purchased on 31st March, 2019.
Answer:
Cash Flow Statement
Amount Amount
Preference Dividend 12,000

Items to be Added:
Loss on sale of Fixed Assets 7,500
Provision for Doubtful Debts 2,500
50,000
Interest on Investment (1,500)
Inventory 5,000
Trade Payables 37,500 (7,500)
Less: Tax Paid -
Purchase of Investment (25,000)
Interest on Investment 1,500
Proceeds from Issue of Share Capital 25,000
Proceeds from Issue of Debentures 50,000
Redemption of Preference Share Capital (50,000)
Premium on Redemption of Preference Share Capital (2,500)
Dividend Paid on Preference Share Capital (12,000)
Dividend Paid on Equity (5,000)
Net Cash Flow from Financing Activities 500
period (6,000+15,000+4,000) 25,000
(12,500+22,500+5,000) 40,000

Wor
king
Note
s:
(1) Interim dividend on equity shares was paid out of General Reserve and not out of Surplus. Hence, the
same has not been considered while calculating Net Profit before Tax and Extra-ordinary items.

(2)


Dr. Cr.
Amount Amount
3,65,000 3,65,000
Page No 5.120:

Question 58:

From the following Balance Sheet of Samta Ltd., as at 31st March, 2019, prepare Cash Flow
Statement:

Particulars Not 31st 31st

March, March,
e 2019 2018
No. ( `) ( `)
(a) Share Capital 1 7,50,000 7,50,000
Long-term Borrowings (8% Debentures) 2,60,000 1,50,000
(a) Short-term Borrowings (8% Bank Loan) 40,000 50,000
(b) Trade Payables 1,20,000 1,10,000
Total 15,30,00 10,80,00
0 0
II. ASSETS
(a) Fixed Assets:
(i) Tangible Assets (Net) 8,60,000 6,20,000
(ii) Intangible Assets (Goodwill) 15,000 40,000
2. Current Assets
(b) Inventories 1,95,000 1,00,000
(d) Cash and Cash Equivalents 1,30,000 25,000
Total 15,30,00 10,80,00
0 0
Notes to Accounts
31st 31st
March, March,
2019 2018
1. Share Capital
7,50,000 7,50,000
Loss 1,50,000 (1,40,000)
3,10,000 (20,000)

(i) During the year a piece of machinery costing ` 60,000 on which depreciation charged
was ` 20,000 was sold at 50% of its book value. Depreciation provided on tangible
Assets ` 60,000;
(ii) Income tax ` 45,000 was provided;
(iii) Additional Debentures were issued at par on 1st October, 2018 and Bank Loan was repaid
on the same date;
(iv) At the end of the year Preference Shares were redeemed at a premium of 5%.
Answer:
Cash Flow Statement
Amount Amount
Profit as per Statement of Profit and Loss [1,50,000 − (−1,40,000)] 2,90,000
Items to be Added:
Loss on Fixed Assets 20,000
Interest on Debentures (6,000 + 10,400) 16,400
Interest on Bank Loan (2,000 + 1,600) 3,600
Premium on Redemption of Preference Shares 5,000
Goodwill written off 25,000 1,30,000
Trade Payables 10,000 (85,000)
Purchase of Investment (45,000)
Premium on Redemption of Preference Share Capital (5,000)
Interest on Bank Loan Paid (3,600)
(25,000+15,000) 40,000
Cash and Cash Equivalents at the end of the period (1,30,000+5,000) 1,35,000
Working Notes:
WN
1:
Dr. Cr.
Amount Amount
Balance b/d 6,20,000 Bank A/c (Sale) (40,000×50%) 20,000
9,60,000 9,60,000

WN2:
Dr. Cr.
Amount Amount
Bank A/c (Tax Paid) (Bal. Fig.) 35,000 Balance b/d 40,000
85,000 85,000
Page No 5.121:

Question 59:

Prepare Cash Flow Statement from the following:
STATEMENT OF PROFIT AND LOSS

Not
e
36,00,0
I. Revenue from Operations (Net Sales) 00
II. Expenses;
28,16,0
Purchases of Stock-in-Trade 00
Change in Inventories of Stock-in-Trade (65,000)
Finance Costs 15,000
5,34,00
Other Expenses 0
33,80,0
Total 00
2,20,00
III. Profit before Tax (I − II) 0
IV. Less: Provision for Tax 40,000
1,80,00
V. Profit after Tax (III − IV) 0
BALANCE SHEET
31st 31st
March, March,
Note 2019 2018
(a) Share Capital 6,00,000 5,00,000
Long-term Loan 1,20,000 1,50,000
(a) Short-term Borrowings: Bank Overdraft 13,000 ...
(b) Trade Payables (Creditors) 2,85,000 2,38,000
(c) Short-term Provision: Provision form Tax 44,000 30,000
13,62,00 10,38,00
Total 0 0
II. ASSETS
Fixed Assets 6,20,000 4,00,000
2. Current Assets
(a) Short-term Investments (Marketable Security) 34,000 20,000
(b) Inventories 3,28,000 2,63,000
(d) Cash and Cash Equivalents 2 32,000 45,000
13,62,00 10,38,00
Total 0 0

Notes to Accounts

31st 31st
Marc Marc
h, h,
2019 2018
3,00,0 1,20,0
Surplus, i.e., Balance in Statement of Profit and Loss 00 00
Cash in Hand 32,000 17,000
Cash at Bank ... 28,000
32,000 45,000
Answer:
Cash Flow Statement
Amount Amount
Items to be Added:
Finance Cost 15,000
Bank Overdraft 13,000
Redemption of Long-Term Loan (30,000)
Interest (Finance Cost) (15,000)
(17,000 + 28,000 + 20,000) 65,000
Cash and Cash Equivalents at the end of the period (32,000 +
34,000) 66,000

Working Notes:

WN1
Dr. Cr.
Amount Amount
Bank A/c (Tax Paid- Bal. Fig.) 26,000 Balance b/d 30,000
70,000 70,000

WN2
Dr. Cr.
Amount Amount
Bank A/c (Purchases- Bal. Fig.) 3,00,000 Balance c/d 6,20,000
7,00,000 7,00,000

Note: Short-term Investments are considered as a part of Cash and Cash Equivalents

Page No 5.123:

Question 60:

From the following Balance Sheet as at 31st March, 2019 and Statement of Profit and Loss for
the year ended 31st March, 2019 of RSB Ltd. and additional information, prepare Cash Flow
Statement:

31st 31st
March, March,
Note 2019 2018
(a) Share Capital 7,50,000 5,00,000
Long-term Borrowings (5%
Debentures) 7,00,000 4,00,000
(a) Trade Payables 1,10,000 90,000
(b) Other Current Liabilities 2 39,000 25,000
(c) Short-term Provisions (Provision
for Tax) 2,60,000 2,25,000
Total 28,09,000 15,40,000
II. ASSETS
(a) Fixed Assets – Tangible 3 6,85,000 7,45,000
(b) Non-current Investments 7,50,000 2,50,000
2. Current Assets
(a) Current Investments 6,74,000 95,000
(b) Inventories 1,00,000 2,00,000
(d) Cash and Cash Equivalents 2,00,000 1,00,000
Total 28,09,000 15,40,000

STATEMENT OF PROFIT AND LOSS
31st 31st
March, March,
Note 2019 2018
I. Revenue from Operations 4 40,00,000 35,00,000
II. Other Income 5 35,000 30,000
III. Total Revenue (I + II) 40,35,000 35,30,000
IV. Expenses:
Purchases of Stock-in-Trade 27,00,000 24,70,000
Change in Inventories of Stock-in-
Trade 6 1,00,000 50,000
Finance Cost 27,500 20,000
Depreciation 40,000 45,000
Other Expenses 22,500 20,000
Total Expenses 28,90,000 26,05,000
V. Profit before Tax (III – IV) 11,45,000 9,25,000
VI. Less: Tax 3,45,000 2,25,000
VII. Profit after Tax (V – VI) 8,00,000 7,00,000

Notes to Accounts

2019 2018
Debenture Redemption Reserve 1,00,000 1,00,000
9,50,000 3,00,000
2. Other Current Liabilities
Interest on Debentures 35,000 20,000
39,000 25,000
3. Fixed Assets–Tangible
Cost 8,90,000 9,90,000
6,85,000 7,45,000
4. Revenue from Operations
Sales 42,00,000 35,75,000
Less: Sales Return 2,00,000 75,000
40,00,000 35,00,000
5. Other Income
Interest on Deposits 15,000 12,500
Dividend on Investments 10,000 17,500
Gain (Profit) on Sale of Fixed Assets 10,000 …
35,000 30,000
6. Change in Inventories of Stock-in-Trade
Opening Stock 2,00,000 2,50,000
Less: Closing Stock 1,00,000 2,00,000
1,00,000 50,000

1. Additional debentures were issued on 1st October, 2018 of `5,00,000. On the same
date, part of outstanding debentures were redeemed and interest was paid, whereas
interest on outstanding debentures was paid on 10th April, 2019.
2. Board of Directors proposed dividend in both the years @ 10%.
3. Interim Dividend of ` 1,00,000 was paid during the year.
4. A fixed asset with original cost of 1,00,000, on which depreciation till date was provided
of ` 80,000 was sold at a profit of ` 10,000.
Answer:
Cash flow Statement
Particulars Amount ( `) Amount ( `)
Net Profit (as per Statement of Profit and Loss) 8,00,000
Add: Provision for Tax Made (WN3) 3,45,000
Net Profit before tax and extraordinary items 11,45,000
Add: Depreciation charged during the year (WN1) 40,000
Finance cost 27,500
Less: Interest on Deposits 15,000
Dividend received on Investments 10,000
Gain on sale of fixed asset 10,000
Net Profit before working capital changes 11,77,500
Add: Increase in Trade Payables 20,000
Decrease in Inventories 1,00,000
Less: Decrease in Outstanding expenses 1,000
Increase in Trade receivables 2,50,000
Net Profit before Tax 10,46,500
Less: Tax Paid 3,10,000
Cash flow from Operating Activities 7,36,500
Sale of Fixed Asset 30,000
Dividend received on Investments 10,000
Interest Received on deposits 15,000
Cash used in Investing Activities (4,45,000)
C. Cash flow from Financing Activities
Proceeds from Issue of shares 2,50,000
Proceeds from Issue of debentures 5,00,000
Cash outflow on redemption of debentures (WN2) (2,00,000)
Finance Cost paid (20,000 + 27,500 – 35,000) (12,500)
Interim Dividend paid (1,00,000)
Proposed Dividend Paid (50,000)
Cash flow from Financing Activities 3,87,500
Net Increase in Cash and Cash Equivalents (A + B + C) 6,79,000
Add: Opening Balance of Cash 1,00,000
Opening Balance of Current Investments 95,000 1,95,000
Closing Balance of Cash and Cash Equivalents 8,74,000
Current Investments Closing Balance 6,74,000
Closing Balance of Cash 2,00,000
8,74,000

Working Notes:
1.
Dr. Accumulated Depreciation A/c Cr.
Amount Amount
2019 2018
March To Fixed Asset A/c
31 (Depreciation on Mach. Sold) 80,000 April 01 By Balance b/d 2,45,000
March By Statement of Profit &
31 To balance c/d 2,05,000 Loss A/c 40,000
2,85,000 2,85,000

Dr. Fixed Assets A/c Cr.
Amount Amount
2018 2019
By Accumulated
April -1 To balance b/d 9,90,000 March 31 Depreciation A/c 80,000
By Bank A/c- Sale of
2019 March 31 Machine (Bal. Fig.) 30,000
To Statement of Profit &
March 31 Loss A/c- Profit 10,000 March 31 By balance c/d 8,90,000
10,00,000 10,00,000
2.
Dr. 5% Debentures A/c Cr.
Amount Amount
2018 2018
October To Bank A/c (Redemption) April
01 (Bal Fig.) 2,00,000 01 By balance b/d 4,00,000
2019 2018
March October By Bank A/c
31 To balance c/d 7,00,000 01 (Issue) 5,00,000
9,00,000 9,00,000
3.
Dr. Provision for Tax A/c Cr.
Amount Amount
2019 2018
March April
31 To Bank A/c- Tax Paid 3,10,000 01 By balance b/d 2,25,000
March To balance c/d 2,60,000 2019
31
March By Statement of
31 Profit & Loss A/c 3,45,000
5,70,000 5,70,000

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(a) Purchase of Shares on a Stock Exchange. (b) Dividend received on Shares.

Profit as per Statement of Profit and Loss (7,20,000 – 4,00,000) 3,20,000

Net Cash Flows from Operating Activities 10,10,000

Calculate Cash Flow from Operating Activities.

Welprint Ltd. has given the following information: `

During the year, a machinery costing ` 50,000 (accumulated depreciation provided

Accumulated Depreciation Account

1st April, 31st March,

Accumulated Depreciation Account

Cash Flow Statement

Calculation of Interest on Debentures

Calculation of Interest on Bank Loan

Note: Proposed Dividend treatment is as per AS-4 (Revised).

Solar Power Ltd.

I. EQUITY AND LIABILITIES

(a) Share Capital 24,00,000 22,00,000

Long-term Borrowings 4,80,000 3,40,000

(a) Trade Payables 3,58,000 4,08,000

(b) Short-term Provisions 1,00,000 1,54,000

Total 39,38,000 35,02,000

(i) Tangible Assets 2 21,40,000 17,00,000

(ii) Intangible Assets 3 80,000 2,24,000

(a) Current Investments 4,80,000 3,00,000

(b) Inventories 2,58,000 2,42,000

(c) Trade Receivables 3,40,000 2,86,000

(d) Cash and Cash Equivalents 6,40,000 7,50,000

Total 39,38,000 35,02,000

31st March, 31st March,

Accumulated Depreciation Account

Particulars 31st 31st

Provision for Tax Account

Particular 31st March 31st March

Particulars 31st 31st

Provision for Tax Account

Particulars Note 31st 31st

(i) Proposed Dividend: 31st March, 2019 31st March, 2018

(ii) A machine with a book value of ` 90,000 was sold for ` 50,000;

Fixed Assets Account

(i) You are informed during the year:

31st March, 31st March,

Profit Before Taxation 94,500

Fixed Assets Account

Particulars Not 31st 31st

STATEMENT OF PROFIT AND LOSS

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