Question

Following are the Balance Sheets of Krishtec Ltd. for the years ended 31st March 2012 and 2011:

Particulars	Note No.	31st March, 2012 (₹)	31st March, 2011 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital		12,00,000	8,00,000
(b) Reserves and Surplus (Surplus, i.e., Balance in Statement of Profit and Loss)		3,50,000	4,00,000
2. Non-Current Liabilities
Long-term Borrowings		4,40,000	3,50,000
3. Current Liabilities
(a) Trade Payables		60,000	50,000
Total		20,50,000	16,00,000
II. ASSETS
1, Non-Current Assets
Fixed Assets:
Tangible Assets		12,00,000	9,00,000
2. Current Assets
(a) Inventories		2,00,000	1,00,000
(b) Trade Receivables		3,10,000	2,30,000
(c) Cash and Cash Equivalents		3,40,000	3,70,000
Total		20,50,000	16,00,000

Prepare a Cash Flow Statement after taking into account the following adjustments:
(a) The company paid Interest ₹36,000 on its long-term borrowings.
(b) Depreciation charged on tangible fixed assets was ₹1,20,000

Answer 1

Cash Flow Statement for the year ended March 31, 2012
	Particulars		Amount (₹)	Amount (₹)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss			(50,000)
	Items to be Added:
	Depreciation		1,20,000
	Interest		36,000	1,56,000
	Operating Profit before Working Capital Adjustments			1,06,000
	Less: Increase in Current Assets
	Inventories		(1,00,000)
	Trade Receivables		(80,000)
	Add: Increase in CurrentLiabilities
	Trade Payables		10,000	(1,70,000)
	Cash Generated from Operations			(64,000)
	Less: Tax Paid			NIL
	Net Cash Flows from Operating Activities			(64,000)
B	Cash Flow from Investing Activities
		Purchase of Tangible Fixed Assets		(4,20,000)
	Net Cash Used in Investing Activities			(4,20,000)
C	Cash Flow from Financing Activities
	Interest Paid			(36,000)
	Proceeds from Issue of Share Capital			4,00,000
	Proceeds from Long Term Borrowings			90,000
	Net Cash Flow from Financing Activities			4,54,000
D	Net Increase or Decrease in Cash and Cash Equivalents			(30,000)
	Add: Cash and Cash Equivalent in the beginning of the period			3,70,000
	Cash and Cash Equivalents at the end of the period			3,40,000

 

Tangible Fixed Assets Account
Dr.		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	9,00,000	Depreciation A/c	1,20,000
Bank A/c (Bal. Fig.)	4,20,000	Balance c/d	12,00,000
	13,20,000		13,20,000