Question

From the following Balance Sheet of Mohan Ltd., prepare a cash flow Statement:

Balance Sheet of Mohan Ltd., as at 31st March 2016 and 31st March 2017
Particulars	Note No.	March 31, 2017 (Rs.)	March 31, 2016 (Rs.)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Equity share capital		3,00,000	2,00,000
b) Reserves and Surplus		2,70,000	2,20,000
2. Non-current liabilities
a) Long-term borrowings	1	80,000	1,00,000
3. Current liabilities
Trade payables		1,20,000	1,40,000
Total		7,70,000	6,60,000
II) Assets
1. Non-current assets
Fixed assets	2	5,00,000	3,20,000
2. Current assets
a) Inventories		1,50,000	1,30,000
b) Trade receivables	3	90,000	1,20,000
c) Cash and cash equivalents	4	30,000	90,000
Total		7,70,000	6,60,000

Notes to accounts:

	2017	2016
1. Long-term borrowings
9% Bank Loan	80,000	1,00,000
2. Fixed assets	6,00,000	4,00,000
Less: Accumulated Depreciation	1,00,000	80,000
(Net) Fixed Assets	5,00,000	3,20,000
3. Trade receivables
Debtors	60,000	1,00,000
Bills receivables	30,000	20,000
	90,000	1,20,000
4. Cash and cash equivalents
Bank	30,000	90,000

Additional Information:

Machine Costing Rs. 80,000, on which accumulated depreciation was Rs. 50,000, was sold for Rs. 20,000. A 9% bank loan of Rs. 20,000 was repaid on March 31, 2017. The proposed dividend for the year 2015-16 was Rs. 60,000.

Answer 1

Cash Flow Statement
Particulars		Amount (Rs.)	Amount (Rs.)
A.	Cash flow from operating activities
	Net profits before tax		1,70,000
	Adjustments
	Add: Proposed dividend	60,000
	Add: Depreciation	70,000
	Add: Loss on sale of machine	10,000
	Add: Interest on 9% Loan	9,000	1,49,000
	Operating profit before working capital changes		3,19,000
	(+) Decrease in Current Assets
	Trade receivables	30,000
	(-) Increase in Current Assets
	Inventories	(20,000)
	(-) Decrease in Current Liabilities
	Trade payables	(20,000)	(10,000)
	Net cash from operating activities		3,09,000
B.	Cash Flow from Investing Activities
	Receipts from sale of fixed assets	20,000
	Purchase of fixed assets	(2,80,000)
	Net cash outflow from Investing Activities		(2,60,000)
C.	Cash Flow from Financing Activities
	Issue of shares	1,00,000
	Bank loan paid	(20,000)
	Payment of proposed dividend (for the year 2016)	(60,000)
	Interest on 9% Loan	(9,000)
	Net cash used in Financing Activities		11,000
D.	Net decrease in Cash and cash equivalents (A + B + C)		(60,000)
	(+) Cash and cash equivalents at the beginning		90,000
E.	Cash and cash equivalents at the end of the period		30,000

 

Net Profit before Tax	Amount (Rs.)
Reserve & Surplus Balance on 31st March 2017	2,00,000
Less: Reserve & Surplus Balance on 31st March 2016	1,60,000
	40,000
Add: Proposed Dividend for previous year	60,000
Add: Provision for tax made during the current year	70,000
Net Profit before Tax	1,70,000

 

Dr.	Fixed Assets A/c		Cr.
Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To balance b/d	4,00,000	By Bank A/c	20,000
To Bank (Purchases- Balancing fig.)	2,80,000	By Profit and Loss	10,000
		By Acc. Dep.	50,000
		By balance c/d	6,00,000
	6,80,000		6,80,000

 

Dr.	Accumulated Depreciation A/c		Cr.
Particulars	Amount (Rs.)	Particulars	Amount (Rs.)
To fixed assets	50,000	By balance b/d	80,000
To balance c/d	1,00,000	By Profit and Loss (Balance fig.)	70,000
	1,50,000		1,50,000