Question

From the following Balance Sheet of Rama Ltd. as at 31st March, 2025, calculate cash flows from Investing Activities and cash flows from Financing Activities.

Balance Sheet of Rama Ltd. as at 31st March, 2025
Particulars	Note No.	31-3-2025 (₹)	31-3-2024 (₹)
I. Equity and Liabilities:
1. Shareholders’ funds
(a) Share Capital		21,00,000	10,00,000
(b) Reserves and Surplus	1	1,30,000	2,40,000
2. Non-current liabilities
Long-term borrowings	2	2,50,000	3,20,000
3. Current Liabilities
(a) Short-term borrowings	3	90,000	70,000
(b) Trade Payables		20,000	60,000
Total		25,90,000	16,90,000
II. Assets:
1. Non-current Assets
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant, and Equipment	4	14,00,000	9,00,000
(ii) Intangible Assets	5	4,00,000	2,40,000
(b) Non-current Investments		5,44,000	3,40,000
2. Current Assets
(a) Inventories		1,45,000	54,000
(b) Trade Receivables		62,000	1,26,000
(c) Cash and Cash Equivalents		39,000	30,000
Total		25,90,000	16,90,000

Notes to Accounts:

Note No.	Particulars	31-03-2025 (₹)	31-03-2024 (₹)
1.	Reserves and Surplus i.e. Balance in Statement of Profit and Loss	1,30,000	2,40,000
2.	Long-term borrowings 10% Debentures	2,50,000	3,20,000
3.	Short-term borrowings Bank overdraft	90,000	70,000
	Property, Plant and Equipment
4.	Plant and Machinery	15,20,000	9,80,000
	Accumulated Depreciation	(1,20,000)	(80,000)
		14,00,000	9,00,000
5.	Intangible Assets:
	Goodwill	4,00,000	2,40,000

Additional Information:

1. Depreciation amounting to ₹ 80,000 was charged on plant and machinery during the year.
2. During the year, a new machine costing ₹ 8,00,000 was purchased, and an old machine was sold at a profit of ₹ 8,000.
3. Interest paid on debentures amounted to ₹ 32,000.

Answer 1

Cash Flow from Investing Activities

Particulars	Amount (₹)	Amount (₹)
Purchase of Plant and Machinery	(8,00,000)
Sale of Plant and Machinery	2,68,000
Purchase of Goodwill (4,00,000 − 2,40,000)	(1,60,000)
Purchase of Non-current Investments (5,44,000 − 3,40,000)	(2,04,000)
Net Cash used in Investing Activities		(8,96,000)

Cash Flow from Financing Activities

Particulars	Amount (₹)	Amount (₹)
Proceeds from Issue of Share Capital (21,00,000 − 10,00,000)	11,00,000
Redemption of 10% Debentures (3,20,000 − 2,50,000)	(70,000)
Proceeds from Bank Overdraft (90,000 − 70,000)	20,000
Interest paid on Debentures	(32,000)
Net Cash Flow from Financing Activities		10,18,000

Working Note:

Plant and Machinery Account (To find Sale Value):

Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d (Opening)	9,80,000	By Accumulated Dep.	40,000
To Bank A/c (Purchase)	8,00,000	By Bank A/c	2,68,000
To Statement of P&L (Profit)	8,000	By Balance c/d (Closing)	15,20,000
	17,88,000		17,88,000

Accumulated Depreciation Account:

Particulars	Amount (₹)	Particulars	Amount (₹)
To Plant & Machinery A/c (Bal. Fig.)	40,000	By Balance b/d (Opening)	80,000
To Balance c/d (Closing)	1,20,000	By Statement of P&L (Dep. charged)	80,000
	1,60,000		1,60,000