Question

From the following extracts of a company’s Balance Sheets, calculate for the year ending 31^st March, 2022:

1. Cash from investing activities.
2. Cash from financing activities.

(Note: Current year’s figures appear in the first column and the previous year’s figures are in the second column.)

Particulars	31.3.2022 (₹)	31.3.2021 (₹)
Equity Share Capital	13,00,000	12,00,000
Long-Term Borrowing (10% Bank Loan)	60,000	1,00,000
Dividend Payable	3,000	-
Property, Plant and Equipment and Intangible Assets:
Plant and Machinery	1,70,000	1,40,000
Less: Accumulated Depreciation	(24,000)	(40,500)
Non-current investments	1,00,000	20,000
Land (at cost)	5,00,000	7,00,000
Goodwill	30,000	40,000

Additional information:

(i)

Contingent Liability:	31.3.2022	31.3.2021
Proposed Dividend (₹)	20,000	21,000

(ii) The Loan instalment and interest on loan was paid at the end of the financial year.

(iii) During the year 2021-22:

1. The company provided depreciation on Plant and Machinery amounting to ₹ 13,500.
2. The company sold 70% of its non-current investments, which it held at the beginning of the year, at a profit of 20% on its book value.

Answer 1

Cash Flow from Investing Activities
Particulars	Amount (₹)
Purchase of Plant and Machinery (WN-1)	(60,000)
Sale of Non-Current Investments (WN-4)	16,800
Purchase of Non-Current Investments (WN-3)	(94,000)
Sale of Land	2,00,000
Net Cash Flow from Investing Activities	62,800

 

Cash Flow from Financing Activities
Particulars	Amount (₹)
Proceeds from the Issue of Equity Shares	1,00,000
Repayment of Bank Loan	(40,000)
Interest paid on Bank Loan (10% of ₹ 1,00,000)	(10,000)
Payment of Proposed Dividend (₹ 21,000 − Dividend Payable ₹ 3,000)	(18,000)
Net Cash Flow from Financing Activities	32,000

Working Note 1:

Dr.	Plant & Machinery Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	1,40,000	By Accumulated Depreciation A/c	30,000
To Bank A/c (Balancing figure, being purchased)	60,000	By Balance c/d	1,70,000
	2,00,000		2,00,000

Working Note 2:

Dr.	Accumulated Depreciation Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Plant & Machinery A/c(a)	30,000	By Balance b/d	40,500
To Balance c/d	24,000	By Statement of Profit & Loss (Current Year’s Depreciation)	13,500
	54,000		54,000

(a) The balancing figure represents fully depreciated Plant & Machinery written off.

Working Note 3:

Dr.	Non-current Investments Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	20,000	By Bank A/c (Sale) (WN-4)	16,800
To Gain on Sale	2,800	By Balance c/d	1,00,000
To Bank A/c (Balancing figure, being purchased)	94,000
	1,16,800		1,16,800

Working Note 4:

	Amount (₹)
70% of Investments at the beginning of the year: 70% of ₹ 20,000	14,000
Add: 20% profit on ₹ 14,000	2,800
Sale price of Investments	16,800