Question

From the following Balance Sheet of Raj Ltd. and the additional information given below, you are required to prepare a Cash Flow Statement (as per AS 3) for the year 2024-25.

Balance Sheet of Raj Ltd. As at 31st March, 2025 and 31st March, 2024
Particulars	Note No.	31st March 2025 (₹)	31st March 2024 (₹)
I. Equity and Liabilities
1. Shareholders’ Funds
(a) Equity Share Capital		4,35,000	3,28,000
(b) Reserve and Surplus	1	1,20,000	80,000
2. Non-Current Liabilities
Long-term borrowings (7% Debentures)		5,00,000	4,00,000
3. Current Liabilities
Short-term Provision (Provision for Tax)		15,000	10,000
Total		10,70,000	8,18,000
II. Assets
1. Non-Current Assets
Property, Plant & Equipment (Plant & Machinery)		6,00,000	3,80,000
2. Current Assets
(a) Short-term Investments		3,00,000	2,20,000
(b) Inventories		80,000	1,00,000
(c) Cash & Bank Balances (Cash at Bank)		90,000	1,18,000
Total		10,70,000	8,18,000

Notes to Accounts:

Particulars	31st March 2025 (₹)	31st March 2024 (₹)
Reserve and Surplus
Balance in Statement of Profit & Loss	1,05,000	70,000
Securities Premium	15,000	10,000
Total	1,20,000	80,000

Additional Information:

• Issued additional Debentures on 1st April, 2024 at a premium of 5%.
• Sold Plant & Machinery at a loss of ₹ 20,000, the book value of which was ₹ 80,000.
• Purchased additional Plant & Machinery for ₹ 3,50,000.

Answer 1

Cash Flow Statement of Raj Ltd. For the year ended 31st March, 2025
Particulars	Details (₹)	Amount (₹)
(A) Cash Flow from Operating Activities
Net Profit Before Tax (Note 1)	50,000
Adjustments for Non-Cash & Non-Operating items:
Add: Depreciation on Plant & Machinery	50,000
Add: Interest on Debentures	35,000
Add: Loss on sale of Plant & Machinery	20,000
Operating Profit before Working Capital Changes	1,55,000
Add: Decrease in Inventories	20,000
Cash Generated from Operations	1,75,000
Less: Tax Paid (Opening Provision)	10,000
Net Cash from Operating Activities (A)		1,65,000
(B) Cash Flow from Investing Activities
Sale of Plant & Machinery	60,000
Purchase of Plant & Machinery	(3,50,000)
Net Cash used in Investing Activities (B)		2,90,000
(C) Cash Flow from Financing Activities
Proceeds from Issue of Equity Shares (4,35,000 − 3,28,000)	1,07,000
Proceeds from Issue of Debentures (incl. 5% Premium)	1,05,000
Payment of Interest on Debentures	(35,000)
Net Cash from Financing Activities (C)		1,77,000
Net Decrease in Cash & Cash Equivalents (A + B + C)		52,000
Add: Opening Balance of Cash at Bank		3,38,000
Closing Balance of Cash at Bank		3,90,000

Working Note:

1.

Dr.	Plant and Machinery		Cr.
Partuculars	Amount (₹)	Partuculars	Amount (₹)
To balance c/d	3,80,000	By Bank A/c	60,000
To Bank A/c	3,50,000	By Loss on Sale	20,000
		By Depreciation	50,000
		By bal c/d	6,00,000
	7,30,000		7,30,000

2. Calculation of profit before tax:

Profit for the year	35,000
Add: Provision for tax	15,000
	50,000