Question

From the following Balance Sheet of SRS Ltd. and the additional information as on 31st March, 2016, prepare a Cash Flow Statement:

SRS Ltd.
BALANCE SHEET as on 31st March, 2016

Particulars	Note No.	31st March, 2016 (₹)	31st March, 2015 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital		4,50,000	3,50,000
(b) Reserves and Surplus	1	1,25,000	50,000
2. Non-Current Liabilities
Long-term Borrowings	2	2,25,000	1,75,000
3. Current Liabilities
(a) Short-term Borrowingst	3	75,000	37,500
(b) Shrot-term Provisions	4	1,00,000	62,500
Total		9,75,000	6,75,000
II. ASSETS
1, Non-Current Assets
(a) Fixed Assets:
(i) Tangible	5	7,32,500	4,52,500
(ii) Intangible	6	50,000	75,000
(b) Non-current Investments		75,000	50,000
2. Current Assets
(a) Current Investments		20,000	35,000
(b) Inventories	7	61,000	36,000
(c) Cash and Cash Equivalents		36,500	26,500
Total		9,75,000	6,75,000

Notes to Accounts

Particular		31st March 2016 (₹)	31st March 2015 (₹)
1.	Reserves and Surplus
	Surplus, i.e., Balance in Statement of Profit and Loss	1,25,000	50,000
2.	Long-term Borrowings
	12% Debentures	2,25,000	1,75,000
3.	Short-term Borrowings
	Bank Overdraft	75,000	37,500
4.	Short-term Provisions
	Provision for Tax	1,00,000	62,500
5.	Tangible Assets
	Machinery	8,37,500	5,22,500
	Accumulated Depreciation	(1,05,000)	(70,000)
		7,32,500	4,52,500
6.	Intangible Assets
	Goodwill	50,000	75,000
7.	Inventories
	Stock-in-Trade	61,000	36,000

Additional Information:
(i) ₹50,000, 12% Debentures were issued on 31st March, 2016.
(ii) During the year, a piece of machinery costing ₹40,000, on which accumulated depreciation was ₹20,000, was sold at a loss of ₹5,000.

Answer 1

Cash Flow Statement  for the year ended March 31, 2016
	Particulars	Amount (₹)	Amount (₹)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss	75,000
	Provision for Tax	1,00,000	1,75,000
	Profit Before Taxation		1,75,000
	Items to be Added:
	Goodwill written off	25,000
	Debentures Interest	21,000
	Depreciation	55,000
	Loss on Sale of Machinery	5,000	1,06,000
	Operating Profit before Working Capital Adjustments		2,81,000
	Less: Increase in Current Assets
	Inventories	(25,000)	(25,000)
	Cash Generated from Operations		2,56,000
	Less: Tax Paid		(62,500)
	Net Cash Flows from Operating Activities		1,93,500
B	Cash Flow from Investing Activities
	Sale of machinery	15,000
	Purchase of machinery	(3,55,000)
	Purchase of non-current investment	(25,000)	(3,65,000)
	Net Cash Used in Investing Activities		(3,65,000)
C	Cash Flow from Financing Activities
	Proceeds from Issue of Share Capital	1,00,000
	Increase in Bank Overdraft	37,500
	Interest on Debentures paid	(21,000)
	Proceeds from Issue of Debentures	50,000
	Net Cash Flow from Financing Activities		1,66,500
D	Net ↑/↓ in Cash and Cash Equivalents (A+B+C)		(5,000)
	Add: Cash and Cash Equivalent in the beginning of the period (26,500+35,000)		61,500
	Cash and Cash Equivalents at the end of the period (36,500+20,000)		56,500

 Working Notes:

Machinery Account
Dr.		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Balance b/d	5,22,500	Bank A/c (Sale)	15,000
Bank A/c (Purchase- Bal. Fig.)	3,55,000	Accumulated Depreciation A/c	20,000
		Profit and Loss A/c (Loss on Sale)	5,000
		Balance c/d	8,37,500
	8,77,500		8,77,500

 

Accumulated Depreciation Account
Dr.		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
Machinery A/c	20,000	Balance b/d	70,000
Balance c/d	1,05,000	Profit and Loss A/c (Dep. charged during the year- Bal. Fig.)	55,000
	1,25,000		1,25,000