Question

From the following information of Realty Ltd., you are required to calculate the company’s Cash and Cash Equivalent as on 31st March 2024, by preparing a Cash Flow Statement (as per AS 3).

1. Net profit before tax was ₹ 14,00,000.
2. Tax of ₹ 5,00,000 was paid.
3. The opening inventory was higher than the closing inventory by ₹ 50,000.
4. The Trade Creditors showed a decrease of ₹ 20,000 on 31st March 2024, when compared to the amount of Trade Creditors on 31st March 2023.
5. Plant & Machinery on 31st March 2023, and 31st March 2024, amounted to ₹ 20,00,000 and ₹ 26,00,000 respectively.
6. New machinery was purchased for ₹ 9,00,000; the purchase consideration being 4% debentures of the face value of ₹ 100 each issued at a discount of 10%.
7. The 4% debentures on 31st March 2023, and 31st March 2024, amounted to ₹ 5,00,000 and ₹ 20,00,000 respectively.
8. ₹ 60,000 was paid by the company for interest on debentures against the amount due of ₹ 80,000.
9. Investments of ₹ 5,00,000 were purchased on 30th November 2023, on which interest of ₹ 40,000 was earned and received.
10. The cash and cash equivalent as on 31st March 2023, was ₹ 3,15,000.

Answer 1

Cash Flow Statement In the Books of Reality Ltd.
Particulars	Amount (₹)	Amount (₹)
A. Net Profit before Tax	14,00,000	13,70,000
Adjustments for non-cash and non-operating items
Add: Depreciation on Machinery	3,00,000
Interest Due on Debentures	80,000
Less: Interest on Investment	(40,000)
Add: Discount on issue of debentures written off	1,00,000
Operating Profit before Working Capital Changes	18,40,000
Add: Decrease in Inventory
Less: Decrease in Creditors	30,000
Less: Tax Paid	(5,00,000)
Net Cash from Operating Activities	13,70,000
B. Cash flow from Investing Activities		(4,60,000)
Interest on investment	40,000
Purchase of investment	(5,00,000)
Net Cash Used in Investing Activities	(4,60,000)
C. Cash Flow from Financing Activities		4,40,000
Proceeds from Issue of debentures	5,00,000
Interest on Debentures Paid	(60,000)
Net Cash Flow From Financing Activities	4,40,000
Net Increase in Cash and Cash Equivalents		13,50,000
Add: Opening Cash and Cash Equivalents		3,15,000
Cash and Cash Equivalents at the End		16,65,000