Question

You are required to prepare a Cash-Flow Statement (as per AS-3) for the year 2018-19 from the following Balance Sheets.

Balance Sheets of Hillock Ltd. As at 31st March, 2018 and 31st March 2019
Particulars	Note No.	31.3.2019 (₹)	31.3.2018 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds:
(a) Equity Share Capital		2,50,000	2,00,000
(b) Reserves and Surplus	1	90,000	50,000
2. Current Liabilities:
(a) Short-term Borrowings (Bank overdraft)		-	10,000
(b) Trade Payables		20,000	15,000
(c) Other Current Liabilities	2	5,000	5,000
(d) Short-term Provisions (Provision for Tax)		25,000	20,000
Total		3,90,000	3,00,000
II. ASSETS
1. Non-Current Assets:
Fixed Assets
Tangible		2,55,000	2,35,000
2. Current Assets:
(a) Current Investments		30,000	-
(b) Inventories		15,000	25,000
(c) Trade Receivables		40,000	10,000
(d) Cash and Bank Balances		50,000	30,000
Total		3,90,000	3,00,000

Notes to Accounts:

Particulars	31.3.2019 (₹)	31.3.2018 (₹)
1. Reserves and Surplus
Balance in Statement of Profit and Loss	70,000	40,000
Securities Premium Reserve	20,000	10,000
	90,000	50,000
2. Other Current Liabilities
Outstanding Expenses	1,000	5,000
Unclaimed Dividend	4,000	-
	5,000	5,000
3. Contingent Liability
Proposed Dividend	5,000	10,000

Additional Information:

During the year 2018-19:

1. A tangible fixed asset costing ₹ 50,000 was purchased.
2. Tax paid ₹ 15,000.
3. Interest of ₹ 1,000 was paid on the bank overdraft.

Answer 1

Dr.	Provision for Tax A/c		Cr.
Particulars	(₹)	Particulars	(₹)
To Bank A/c	15,000	By Balance b/d	20,000
To Balance c/d	25,000	By Statement of P & L	20,000
	40,000		40,000

 

Profit or Loss during the end of the year (closing)	70,000
Less: Profit or Loss start of the year (opening)	40,000
	30,000
Add: Provision for Tax	20,000
Proposed Dividend	10,000
Net Profit Before tax	60,000

 

Dr.	Plant and Machinery/Fixed Asset Account		Cr.
Particulars	(₹)	Particulars	(₹)
To Balance b/d	2,35,000	By Depreciation A/c	30,000
To Bank A/c	50,000	By Balance c/d	2,55,000
	2,85,000		2,85,000

 

Cash Flow Statement
	Particulars		Details	Amount (₹)
A	Cash flow from Operating Activities			27,000
	Net Profit before tax		60,000
	Add: Depreciation	30,000	31,000
	Interest on Bank Overdraft	1,000
	Operating profit before working capital changes		91,000
	Add: Increase in Current Liabilities and decrease in Current Assets		15,000
	Trade Payables	5,000
	Inventories	10,000
	Less: Increase in current assets and decrease in current liabilities		1,06,000
	Outstanding expenses	(4,000)	(64,000)
	Trade Receivables	(30,000)
	Increase in current investments	(30,000)
			42,000
	Less: Tax Paid during year		(15,000)
	Cash flow from Operating Activities		27,000
B	Cash Flow from Investing Activities			(50,000)
	Proceeds from Purchase of fixed asset		(50,000)
	Cash used in Investing activities		(50,000)
C	Cash flow Financing activities
	Proceeds from Issue of Equity Share capital (shares were issued on premium hence increase in Security premium reserve will be added (50,000 + 10,000)		60,000	43,000
	Repayment of Bank Overdraft		(10,000)
	Interest on Bank overdraft		(1,000)
	Dividend paid		(6,000)
			43,000
	Net Increase in Cash and Cash equivalents during the year (A + B + C)			20,000
	Add: Cash and Cash Equivalents of Previous Year			30,000
	Cash and Cash Equivalents of Current Year
	Cash and Bank Balances		50,000	50,000