Question

From the following Balance Sheets of Platinum Ltd., you are required to prepare a Cash Flow Statement (as per AS 3) for the year 2022-23.

Balance Sheets of Platinum Ltd. As at 31st March, 2023 and 31st March, 2022
Particulars	Note No.	31.3.2023 (₹)	31.3.2022 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital (Equity)		4,00,000	4,00,000
(b) Reserves and Surplus	1	1,30,000	1,20,000
2. Non-Current Liabilities
Long-term Borrowings (5% Debentures)		3,50,000	2,60,000
3. Current Liabilities
Short-term Provision (Provision for Tax)		60,000	25,000
TOTAL		9,40,000	8,05,000
II. ASSETS
1. Non-Current Assets
Property, Plant & Equipment & Intangible Assets
(i) Property, Plant & Equipment (Plant & Machinery)		6,00,000	7,80,000
2. Current Assets
Cash & Bank Balances (Cash at Bank)		3,40,000	25,000
TOTAL		9,40,000	8,05,000

Notes to Accounts:

Particulars	31.3.2023 (₹)	31.3.2022 (₹)
1. Reserves and Surplus
Securities Premium	-	20,000
Balance in Statement of Profit and Loss	1,30,000	1,00,000

Additional information:

During the year 2022-23, the company:

1. Paid share issue expenses of ₹ 25,000.
2. Sold a machine for ₹ 90,000 at a profit of ₹ 10,000.

Answer 1

CASH FLOW STATEMENT OF PLATINUM LIMITED for the year ended 31st March, 2023
Particulars	Amount (₹)	Amount (₹)
A. Cash Flows from Operating Activities:
Profit before Tax (Working Note 1)		90,000
Adjustments for non-cash and non-operating items:
Add:
Depreciation of Plant & Machinery	1,00,000	1,22,500
Interest paid on Debentures	17,500
Share Issue Expenses Written off	5,000
		2,12,500
Less:
Gain on Sale of Machine		(10,000)
Cash generated from operating activities		2,02,500
Less: Income Tax paid		(25,000)
Net Cash from operating activities		1,77,500
B. Cash Flows from Investing Activities:
Sale of Machinery	90,000
Net Cash from investing activities		90,000
C. Cash Flows from Financing Activities:
Payment of Share Issue Expenses	(25,000)
Proceeds from Issue of Debentures	90,000
Interest on Debentures	(17,500)
Net Cash from financing activities		47,500
Net Increase in cash and cash equivalents		3,15,000
Add: Cash and cash equivalents at the beginning of the period		25,000
Cash and cash equivalents at the end of the period		3,40,000

Working Notes:

(1) 

Particulars	Amount (₹)
Profit before Tax:
Profit & Loss Balance on 31st March, 2023	1,30,000
Less: Profit & Loss Balance on 31st March, 2022	1,00,000
	30,000
Add: Provision for Tax for 2023	60,000
	90,000

(2)

Dr.	Plant & Machinery Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	7,80,000	By Bank A/c	90,000
To Gain on Sale of Machinery	10,000	By Depreciation A/c (Balancing Figure)	1,00,000
		By Balance c/d (Given)	6,00,000
	7,90,000		7,90,000

(3) It is expected that more debentures were issued at the start of the year.

(4) Share Issue Expenses amounting to ₹ 20,000 were written off from Securities Premium, and the remaining ₹ 5,000 from Statement of Profit & Loss.