Question

Calculate 'Cash Flows from Investing Activities' and 'Cash Flows from Financing Activities' for the year ended 31st March 2021 from the following Balance Sheet of Kamna Ltd. as 31st March 2021 showing your workings clearly:

Kamna Ltd. Balance Sheet as at 31st March, 2021
Particulars	Note No.	31st March, 2021 (₹)	31st March, 2020 (₹)
I. Equity and Liabilities
1. Shareholders' Funds
(a) Share Capital		12,00,000	11,00,000
(b) Reserves and surplus	1	3,00,000	2,00,000
2. Non-Current Liabilities
Long-term borrowings		2,40,000	1,70,000
3. Current Liabilities
Trade payables		2,20,000	2,81,000
Total		19,60,000	17,51,000
II. Assets
1. Non Current Assets
(a) Fixed Assets
(i) Tangible Assets	2	10,70,000	8,50,000
(ii) Intangible Assets	3	40,000	1,12,000
2. Current Assets
(a) Current Investments		2,40,000	1,50,000
(b) Inventories		1,20,000	1,21,000
(c) Trade Receivables		1,70,000	1,43,000
(d) Cash and Cash Equivalents		3,20,000	3,75,000
Total		19,60,000	17,51,000

Notes to Accounts:

Note No.	Particulars	31st March, 2021 (₹)	31st March, 2020 (₹)
1.	Reserve and Surplus:	3,00,000	2,00,000
	Surplus i.e. Balance in
	Statement of Profit & Loss
2.	Tangible Assets:
	Machinery	12,70,000	10,00,000
	Accumulated Depreciation	(2,00,000)	(1,50,000)
		10,70,000	8,50,000
3.	Intangible Assets:
	Goodwill	4,000	1,12,000

Additional Information:

A piece of machinery costing ₹ 24,000 on which accumulated depreciation was ₹ 16,000, was sold for ₹ 6,000.

Answer 1

Cash Flow from Investing Activities
Particulars	Amount (₹)
Proceeds from sale of machinery	6,000
Purchase of machinery (Working Note)	(2,94,000)
Net Cash used in Investing Activities	(2,88,000)

 

Cash Flow from Financing Activities
Particulars	Amount (₹)
Proceeds from issue of share capital	1,00,000
Proceeds from long-term borrowings	70,000
Net Cash flow from Financing Activities	1,70,000

Working Notes:

Dr.	Machinery A/c		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	10,00,000	By Bank A/c (Sale proceed)	6,000
To Bank A/c (Bal. fig. Machinery Purchased)	2,94,000	By Accumulated Depreciation	16,000
		By Loss on sale (24,000 − 16,000 − 6,000)	2,000
		By Balance c/d	12,70,000
	12,94,000		12,94,000

 

Accumulated Depreciation
Particulars	Amount (₹)	Particulars	Amount (₹)
To Machinery	16,000	By Balance b/d	1,50,000
To Balance c/d	2,00,000	By Statement of Profit & Loss (Balancing figures)	66,000
	2,16,000		2,16,000