Question

Following was the Balance Sheet of M.M. Ltd. as at 31st March, 2015

Particulars	Note No.	(₹)	(₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital		5,00,000	4,00,000
(b) Reserves and Surplus	1	2,00,000	(50,000)
2. Non-Current Liabilities
Long-term Borrowings	2	4,50,000	5,00,000
3. Current Liabilities
(a) Short-term Borrowings	3	1,50,000	50,000
(b) Short-term Provisions	4	70,000	90,000
Total      Total Expenses		13,70,000	9,90,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets:
(i) Tangible Assets	5	10,03,000	7,20,000
(ii) Intangible Assets	6	20,000	30,000
(b) Non-Current Investments		1,00,000	75,000
2. Current Assets
(a) Current Investments		50,000	60,000
(b) Inventories	7	1,07,000	45,000
(c) Cash and Cash Equivalents		90,000	60,000
Total		13,70,000	9,90,000

Notes to Accounts :

Particular		31st March 2015 (₹)	31st March 2014 (₹)
1.	Reserves and Surplus
	Surplus, i.e., Balance in Statement of Profit and Loss	2,00,000	(50,000)
		2,00,000	(50,000)
2.	Long-term Borrowings
	12% Debentures	4,50,000	5,00,000
		4,50,000	5,00,000
3.	Short-term Borrowings
	Bank Overdraft	1,50,000	50,000
		1,50,000	50,000
4.	Short-term Provisions
	Provision for Tax	70,000	90,000
		70,000	90,000
5.	Tangible Assets
	Machinery	12,03,000	8,21,000
	Less: Accumulated Depreciation	(2,00,000)	(1,01,000)
		10,03,000	7,20,000
6.	Intangible Assets
	Goodwill	20,000	30,000
		20,000	30,000
7.	Inventories
	Stock-in-Trade	1,07,000	45,000
		1,07,000	45,000

Additional Information:
1. 12% Debentures were redeemed on 31st March, 2015.
2. Tax ₹ 70,000 was paid during the year.
Prepare Cash Flow Statement.

Answer 1

		Cash Flow Statement  for the year ended 31st March 2015
	Particulars			Amount (₹)	Amount (₹)
I	Cash Flow from Operating Activities
	A. Net Profit before Tax and Extraordinary items*				2,50,000
	Adjustments for Non-cash and Non-operating items
	B. Add: Items to be Added
	Depreciation			99,000
	Intangible Assets Written off			10,000
	Interest on Debentures (12% of 5,00,000)			60,000
	Provision for Tax			50,000	2,19,000
	C. Less: Items to be Deducted
	D.Operating Profit before Working Capital Adjustments (A + BC)				4,69,000
	E. Add: Decrease in Current Assets and Increase in Current Liabilities
	F. Less: Increase in Current Assets and Decrease in Current Liabilities
	Inventories			62,000	(62,000)
	Cash Generated from Operations (D + E – F)				4,07,000
	Less: Income Tax Paid (Net of Refund)			70,000	(70,000)
	Net Cash Flows from (or used in) Operating Activities				3,37,000
II	Cash Flow from Investing Activities
	Purchase of Fixed Assets (12,03,000 – 8,21,000)			(3,82,000)
	Purchase of Non-Current Investments			(25,000)
	Net Cash Flows from (or used in) Investing Activities				(4,07,000)
III	Cash Flow from Financing Activities
	Proceeds from Issue of Share Capital			1,00,000
	Redemption of Debentures			(50,000)
	Interest Paid on Debentures			(60,000)
	Increase in Bank Overdraft			1,00,000
	Net Cash Flow from Financing Activities				90,000
IV	Net Increase or Decrease in Cash and Cash Equivalents (I + II + III)				20,000
			Add: Cash and Cash Equivalent at the beginning of the period		1,20,000
			(Includes Current Investments of Rs 60,000)
	Cash and Cash Equivalents at the end of the period				1,40,000
	(Includes Current Investments of Rs 50,000)

                                                       Provision for Tax Account

Dr.                                                                                                                                                    Cr.

Particulars	Amount (₹)	Particulars	Amount (₹)
Bank A/c	70,000	Balance b/d	90,000
Balance c/d	70,000	Statement of Profit and Loss	50,000
	1,40,000		1,40,000