Question

Following are the Balance Sheets of Solar Power Ltd. as at 31st March, 2014 and 2013:

Solar Power Ltd.

BALANCE SHEET

Particulars	Note No.	31st March, 2014 (₹)	31st March, 2013 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital		24,00,000	22,00,000
(b) Reserves and Surplus	1	6,00,000	4,00,000
2. Non-Current Liabilities
Long-term Borrowings		4,80,000	3,40,000
3. Current Liabilities
(a) Trade Payables		3,58,000	4,08,000
(b) Short-term Provisions		1,00,000	1,54,000
Total		39,38,000	35,02,000
II. ASSETS
1. Non-Current Assets
Fixed Assets:
(i) Tangible Assets	2	21,40,000	17,00,000
(ii) Intangible Assets	3	80,000	2,24,000
2. Current Assets
(a) Current Investments		4,80,000	3,00,000
(b) Inventories		2,58,000	2,42,000
(c) Trade Receivables		3,40,000	2,86,000
(d) Cash and Cash Equivalents		6,40,000	7,50,000
Total		39,38,000	35,02,000

 Notes to Accounts

Particulars	31st March, 2014 (₹)	31st March, 2013 (₹)
1. Revenue and Surplus Surplus, i.e.,Balance in Statement of Profit and Loss	6,00,000	4,00,000
2. Tangible Assets
Machinery	25,40,000	20,00,000
Less: Accumulated Deprciation	(4,00,000)	(3,00,000)
	21,40,000	17,00,000
3. Intangible Assets
Goodwill	80,000	2,24,000

Additional Iformation:
Druing the year, a piece of machinery costing ₹ 48,000 on which accumulated deprciation was ₹ 32,000. was sold for ₹ 12,000. Prepare Cash Flow Statement.

Answer 1

	Cash Flow Statement  for the year ended March 31, 2014
	Particulars		Amount (Rs)	Amount (Rs)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss		2,00,000
	Profit Before Taxation			2,00,000
	Items to be Added:
	Amortisation of Goodwill		1,44,000
	Depreciation		1,32,000
	Loss on Sale of Fixed Assets		4,000	2,80,000
	Operating Profit before Working Capital Adjustments			4,80,000
	Less: Increase in Current Assets
		Inventories	16,000
		Trade Receivables	54,000
	Less: Decrease in Current Liabilities
	Trade Payables		50,000
	Short-Term Provisions		54,000	1,74,000
	Net Cash Generated from Operating Activities			3,06,000
B	Cash Flow from Investing Activities
		Sale of Machinery	12,000
		Purchase of Machinery	(5,88,000)
	Net Cash Used in Investing Activities			(5,76,000)
C	Cash Flow from Financing Activities
	Proceeds from Issue of Share Capital		2,00,000
	Proceeds from Long Term Borrowings		1,40,000
	Net Cash Flow from Financing Activities			3,40,000
D	Net Increase or Decrease in Cash and Cash Equivalents			70,000
		Add: Cash and Cash Equivalent in the beginning of the  period		10,50,000
	Cash and Cash Equivalents at the end of the period			11,20,000

Working Notes:

Machinery Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Balance b/d	20,00,000	Bank A/c (Sale)	12,000
Bank A/c (Purchase- Bal. Fig.)	5,88,000	Depreciation on Part of Machinery	32,000
		Profit and Loss A/c (Loss on Sale)	4,000
		Balance c/d	25,40,000
	25,88,000		25,88,000

 

Accumulated Depreciation Account
Dr.		Cr.
Particulars	Amount (Rs)	Particulars	Amount (Rs)
Machinery A/c	32,000	Balance b/d	3,00,000
Balance c/d	4,00,000	Profit and Loss A/c (Dep. charged during the year- Bal. Fig.)	1,32,000
	4,32,000		4,32,000