Question

Following is the information provided for Creation Ltd. for the year ended 31.3.2025:

1. Equity share capital of ₹ 10 each increased from ₹ 10,00,000 to ₹ 15,00,000.
2. 12%, 3,000 Debentures of ₹ 100 each redeemed on 30.9.2024.
3. Proposed dividend on equity shares for the previous year was ₹ 1,50,000.
4. 12%, 20,000 Preference shares of ₹ 100 each issued at par on 31.3.2025.
5. Out of the equity share capital issued, ₹ 1,00,000 issued for consideration other than cash for purchase of machinery.

You are required to ascertain cash flow from the financing activity.

Answer 1

Cash Flows from Financing Activities
Particulars	Amount (₹)
Redemption of debentures	(3,00,000)
Interest paid on debentures	(18,000)
Dividend paid	(1,50,000)
Proceeds from issue of Preference Shares	2,00,000
Proceeds from issue of Equity Shares	4,00,000
Proceeds from Issue of 12% Preference Shares	20,00,000
Cash used in financing activities	19,32,000

Working Note:

(1) Calculation of Equity Shares Issued:

Equity share capital = 15,00,000 − 10,00,000

= ₹ 5,00,000

₹ 1,00,000 issued for non-cash (machinery)

Cash Issue = 5,00,000 − 1,00,000

= ₹ 4,00,000

(2) Calculation of Preference Shares Issued:

Preference shares issued = 20,000 shares × ₹ 100

= ₹ 20,00,000

(3) Calculation of 12% Debenture Redemption:

Redemption of debentures = 3,000 × ₹ 100

= ₹ 3,00,000