Question

On the basis of information given by Aradhana Ltd., prepare a Cash Flow Statement for the year ending 31st March 2021:

Aradhana Ltd. Balance Sheet as on 31st March, 2021
Particulars	Note No.	31st March, 2020	31st March, 2021
I. Equity and Liabilities
1. Shareholder’s Funds
(a) Share Capital		5,00,000	7,30,000
(b) Reserves and Surplus	1	3,50,000	3,70,000
2. Non-current Liabilities
Long-term Borrowings	2	4,00,000	2,00,000
3. Current Liabilities
(a) Trade Payables	3	3,60,000	4,60,000
(b) Short Term provisions	4	3,25,000	3,20,000
Total		19,35,000	20,80,000
II. Assets
1. Non-current Assets
(a)Fixed Assets	5
(i) Tangible Assets	6	4,50,000	5,00,000
(ii) Intangible Assets		3,10,000	3,02,000
(b)Long-term Loans and Advances		4,00,000	4,30,000
2. Current Assets
(a) Inventories		2,70,000	2,90,000
(b) Trade Receivables		2,40,000	2,60,000
(c) Cash and Cash Equivalents		2,65,000	2,98,000
Total		19,35,000	20,80,000

Note to Accounts

Particulars	31st March 2020	31st March 2021
1. Reserves and Surplus Statement of Profit and loss	3,50,000	3,70,000
2. Long-term Borrowings 10% Debentures	4,00,000	2,00,000
3. Trade Payables
Creditors	2,40,000	2,60,000
Bills Payable	1,20,000	2,00,000
	3,60,000	4,60,000
4. Short-Term Provisions Provision for Tax	3,25,000	3,20,000
5. Tangible Fixed Assets
Machinery	5,50,000	6,60,000
Less: Provision for Depreciation	1,00,000	1,60,000
	4,50,000	5,00,000
6. Intangible Fixed Assets Patents	3,10,000	3,02,000

Additional Information:

1. Debentures were redeemed on 1st April,2020.
2. Tax paid during the year ₹2,80,000.

Answer 1

Aradhana Ltd. Cash Flow statement for the year ended 31.3.21
Particulars		Details	Amount (`)
A) Cash flow from Operating Activities
Net Profit Before Tax and Extraordinary Items (W.Note No. 1)		2,95,000
Adjustments for non-cash and non-operating items
Add:- Depreciation of the year	60,000
Amortisation of patents	8,000
Interest on Debentures	20,000	88,000
Operating Profit Before working capital changes		3,83,000
Add:- Increase in creditors	20,000
Increase in Bills Payable	80,000
Less:- Increase in Inventories	20,000
Increase in Trade Receivables	20,000	60,000
Cash generated from operations		4,43,000
Less:- Payment of Tax		(2,80,000)
Cash Flow from Operating Activities(A)			1,63,000
B) Cash Flow From Investing Activities
Purchase of Machinery		(1,10,000)
investment in long term loans and advances		(30,000)
Cash used in Investing Activities (B)			(1,40,000)
C) Cash Flow From Financing Activities
Issue of Equity shares		2,30,000
Payment of Interest		(20,000)
Redemption of Debentures		(2,00,000)	10,000
D) Net Increase in cash and cash equivalents (A+B+C)			33,000
Add:- Opening Cash and Cash Equivalents			2,65,000
Closing Cash and Cash Equivalents			2,98,000

Working Notes:-

1. Net Profit as per the statement of Profit and Loss	20,000
Add: Tax provided during the year	2,75,000
	2,95,000