Question

D.K. Ltd. provides you the following information:

	₹
Non-Current Investments as on 31-3-2021	1,20,000
Non-Current Investments as on 31-3-2022	40,000

During the year 2022, the company sold 80% of its original investments at a profit of 20% on book value. Calculate sources and uses of cash.

Answer 1

Dr.	Non-Current Investments A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	1,20,000	By Bank A/c (Sale Proceeds)	1,15,200
To Bank A/c (Purchases)	16,000	By Profit & Loss A/c (Profit will get less)	(19,200)
		By Balance c/d	40,000
Total	1,36,000	Total	1,36,000

Working Note:

80% of ₹ 1,20,000 = ₹ 96,000 (Book Value sold)

Profit = 20% of ₹ 96,000 

= ₹ 19,200

Sale Proceeds = ₹ 96,000 + ₹ 19,200 

= ₹ 1,15,200

Calculation of Credit Side Transactions:

Sale Proceeds − Profit + Balance (31-3-2022)

₹ 1,15,200 − ₹ 19,200 + ₹ 40,000

₹ 1,36,000