Question

Following is the Balance Sheet of Kingopen Ltd. as at 31st March, 2026:

Particulars	Note No.	31st March, 2026 (₹)	31st March, 2025 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital		4,50,000	4,00,000
(b) Reserves and Surplus	1	37,000	30,000
2. Non-Current Liabilities
Long-term Borrowings	2	1,15,000	60,000
3. Current Liabilities
(a) Short-term Borrowings (Bank Overdraft)		68,000	1,25,000
(b) Trade Payables		60,000	70,000
(c) Other Current Liabilities	3	8,000	5,000
(d) Short-term Provisions	4	42,000	30,000
Total		7,80,000	7,20,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible Assets:
Property, Plant and Equipment (Machinery)		2,50,000	3,00,000
2. Current Assets
(a) Current Investments		5,00,000	2,00,000
(b) Trade Receivables		4,90,000	4,00,000
(c) Cash and Cash Equivalents		35,000	18,000
Total		7,80,000	7,20,000

Notes to Accounts

Particulars	31st March, 2026 (₹)	31st March, 2025 (₹)
1. Reserves and Surplus
Surplus, i.e., Balance in Statement of Profit & Loss	37,000	30,000
2. Long-term Borrowings
10% Debentures	1,15,000	60,000
3. Other Current Liabilities
Dividend Payable	8,000	5,000
4. Short-term Provisions
Provision for Tax	42,000	30,000

Note: Proposed Dividend for the year ended 31st March, 2025 and 2026 are ₹ 58,000 and ₹ 53,000 respectively.

Additional Information:

1. Interest paid on Debentures ₹ 6,000.
2. Depreciation charged during the year was ₹ 40,000.
3. 5,000 equity shares of ₹ 10 each were issued on 31st March, 2026; Share Issue Expenses incurred ₹ 5,000, which were written off from Statement of Profit & Loss.

You are required to prepare a Cash Flow Statement (as per AS-3) for the year 2025–26.

Answer 1

Kingopen Ltd. Cash Flow Statement for the year ended 31st March, 2026
Particulars	Details (₹)	Amount (₹)
(A) Cash Flow from Operating Activities
Net Profit as per Statement of Profit & Loss (₹ 37,000 - ₹ 30,000)	7,00,0
(+) Proposed Dividend for previous year (2024-25)	58,000
(+) Provision for Tax made during the year (WN 3)	42,000
Net Profit Before Tax and Extraordinary Items	1,07,000
Adjustments for Non-Cash and Non-Operating Items:
(+) Depreciation charged on Machinery	40,000
(+) Interest paid on Debentures	6,000
(+) Share Issue Expenses written off	5,000
Operating Profit before Working Capital Changes	1,58,000
Adjustments for Working Capital changes:
(-) Increase in Trade Receivables (₹ 4,00,000 to ₹ 4,90,000)	(90,000)
(-) Decrease in Trade Payables (₹ 70,000 to ₹ 60,000)	(10,000)
Cash Generated from Operations	58,000
(-) Income Tax Paid (WN 3)	(30,000)
Net Cash Flow from Operating Activities (A)		28,000
(B) Cash Flow from Investing Activities
Sale of Property, Plant & Equipment (Machinery) (WN 1)	10,000
Net Cash Flow from Investing Activities (B)		10,000
(C) Cash Flow from Financing Activities
Proceeds from Issue of Share Capital (5,000 shares × ₹ 10)	50,000
(-) Payment of Share Issue Expenses	(5,000)
Proceeds from Issue of 10% Debentures (₹ 1,15,000 - ₹ 60,000)	55,000
(-) Repayment of Bank Overdraft (₹ 1,25,000 - ₹ 68,000)	(57,000)
(-) Interest paid on Debentures	(6,000)
(-) Previous year's Dividend Paid (WN 2)	(55,000)
Net Cash Used in Financing Activities (C)		(18,000)
Net Increase in Cash & Cash Equivalents (A + B + C)		20,000
(+) Cash & Cash Equivalents at the beginning of the year (WN 4)		20,000
Closing Cash & Cash Equivalents at the end of the year (WN 4)		40,000

Working Notes:

1. Property, Plant and Equipment (Machinery) Account

Debit side: Opening Balance = ₹ 3,00,000.

Credit side: Depreciation = ₹ 40,00, Closing Balance = ₹ 2,50,000.

The balancing figure on the credit side reveals a Sale of Machinery = ₹ 10,00,000 (₹ 3,00,000 - ₹ 40,000 - ₹ 2,50,000).

2. Dividend Paid Calculation

Previous year's proposed dividend (₹ 58,000) becomes due.

Opening Dividend Payable (₹ 5,000) + New Dividend Due (₹ 58,000) - Closing Dividend Payable (₹ 8,000) = ₹ 55,000 paid.

3. Provision for Tax & Tax Paid

Since no additional information is given for tax, the opening balance is treated as tax paid (₹ 30,000) and the closing balance is treated as the provision made during the year (₹ 42,000).

4. Cash and Cash Equivalents Components

Opening: Cash (₹ 18,000) + Current Investments (₹ 2,000) = ₹ 20,000

Closing: Cash (₹ 35,000) + Current Investments (₹ 5,000) = ₹ 40,000