Question

Given below are the Balance Sheets of X Ltd. as at 31st March, 2024 and 31st March, 2023.

Particulars	Note No.	31st March, 2024 (₹)	31st March, 2023 (₹)
I. EQUITY AND LIABILITIES:
1. Shareholders’ Funds:
(a) Equity Share Capital		3,50,000	3,00,000
(b) Reserves and Surplus	1	2,20,000	1,60,000
2. Non-Current Liabilities:
Long-term Borrowings	2	2,50,000	1,50,000
3. Current Liabilities:
Trade Payables	3	1,25,000	85,000
Total		9,45,000	6,95,000
II. ASSETS:
1. Non-Current Assets:
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment (Machinery)		4,10,000	3,20,000
(ii) Intangible Assets (Goodwill)		80,000	1,00,000
(b) Non-Current Investments	4	80,000	30,000
2. Current Assets:
(a) Inventories		55,000	40,000
(b) Trade Receivables		1,90,000	80,000
(c) Cash & Bank Balances	5	1,30,000	1,25,000
Total		9,45,000	6,95,000

Notes to Accounts:

Particulars	31st March, 2024 (₹)	31st March, 2023 (₹)
1. Reserve & Surplus:
General Reserve	1,45,000	1,00,000
Surplus, i.e., Balance in Statement of Profit and Loss	75,000	60,000
	2,20,000	1,60,000
2. Long-term Borrowings:
11% Debentures	2,50,000	1,50,000
3. Trade Payables:
Creditors	1,10,000	75,000
Bills Payable	15,000	10,000
	1,25,000	85,000
4. Non-Current Investments:
12% Investments	80,000	30,000
5. Cash and Bank Balances:
Bank	1,30,000	1,20,000
Cash	-	5,000
	1,30,000	1,25,000

Additional Information:

1. Investments costing ₹ 30,000 were sold for ₹ 36,000 at the end of the year.
2. New debentures have been issued at the end of the current accounting year at a discount of 5% which was written off from General Reserve.
3. New investments have been purchased at the end of the current accounting year.
4. Depreciation charged on machinery during the current accounting year was ₹ 10,000.

From the above information, prepare Cash Flow Statement as per Accounting Standard-3 (Revised).

Answer 1

Cash Flow Statement for the year ended 31‑03‑2024.
Particulars	Amount (₹)	Amount (₹)
A. Cash Flow from Operating Activities:
Net profit (WN‑1)		65,000
Add:
Depreciation on Machinery	10,000
Goodwill written off (₹ 61,00,000 − ₹ 80,000)	20,000
Interest on 11% Debentures (11% of ₹ 1,50,000)	16,500
Less:
Profit on Sale of Investments (₹ 36,000 − ₹ 30,000)	(6,000)
Interest on Investments (12% of ₹ 30,000)	(3,600)	36,900
Operating Profit before Working Capital Changes		1,01,900
Adjustment for changes in Working Capital:
Less:
Inventories	(15,000)
Trade Receivables	(1,10,000)
Add: Trade Payables	40,000
Net Change in Working Capital	(85,000)	(85,000)
Net Cash from Operating Activities (A)		16,900
B. Cash Flow from Investing Activities:
Add:
Sale of Investments	36,000
Interest on Investments Received	3,600	39,600
Less:
Purchase of Machinery (WN-2)	(1,00,000)
Purchase of Non-Current Investments	(80,000)	(1,80,000)
Net Cash used in Investing Activities (B)		(1,40,400)
C. Cash Flow from Financing Activities:
Add:
Proceeds from the Issue of Share Capital	50,000
Proceeds from Issue of 11% Debentures (WN-3)	95,000	1,45,000
Less: Debenture Interest Paid		(16,500)
Net Cash from Financing Activities (C)		1,28,500
Net Increase in Cash & Cash Equivalents (A + B + C)		5,000
Add: Opening Cash & Bank Balance		1,25,000
Closing Cash & Bank Balance		1,30,000

Working Note 1: Calculation of Net Profit for the Year.

Particulars	Amount (₹)	Amount (₹)
Closing Surplus (P&L)	75,000
Less: Opening Surplus (P&L)	(60,000)	15,000
Add:
Transfer to General Reserve	45,000
Discount on Issue of Debentures written off from Reserve	5,000	50,000
Net Profit for the Year		65,000

Working Note 2: Calculation of Purchase of Machinery.

Particulars	Amount (₹)	Amount (₹)
Closing Balance	4,10,000
Less: Opening Balance	(3,20,000)	90,000
Add: Depreciation		10,000
Purchase of Machinery		1,00,000

Working Note 3: Calculation of Proceeds from Issue of 11% Debentures.

Particulars	Amount (₹)	Amount (₹)
Closing Debentures		2,50,000
Less:
Opening Debentures	(1,50,000)
Discount @ 5%	(5,000)	(1,55,000)
Cash Proceeds		95,000