Question

The Balance Sheet of A Ltd. as at 31-3-2022 and 31-3-2021 were as follows:

Particulars	Note No.	31st March, 2022 (₹)	31st March, 2021 (₹)
I. EQUITY AND LIABILITIES:
(1) Shareholders’ Funds:
(a) Share Capital		60,000	50,000
(b) Reserves and Surplus	1	41,000	46,000
(2) Non-Current Liabilities:
Long-term Borrowings		25,000	20,000
(3) Current Liabilities:
(a) Trade Payables		12,000	10,000
(b) Short-term Provisions	2	17,000	20,000
Total		1,55,000	1,46,000
II. ASSETS
(1) Non-Current Assets:
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment (Machinery)		1,00,000	90,000
(2) Current Assets:
(a) Inventory		24,000	20,000
(b) Trade Receivables		26,000	32,000
(c) Cash & Bank Balances		5,000	4,000
Total		1,55,000	1,46,000

Notes:

Particulars	31st March, 2022 (₹)	31st March, 2021 (₹)
1. Reserves and Surplus:
General Reserve	8,000	5,000
Profit & Loss Balance	33,000	41,000
	41,000	46,000
2. Short-term Provision:
Income Tax Provision	17,000	20,000

Additional Information:

1. Depreciation written off on Machinery was ₹ 18,000.
2. Interest paid on Long-term Borrowings amounted to ₹ 3,000.
3. Income Tax of ₹ 15,000 has been paid. 

Prepare a Cash-Flow Statement.

Answer 1

Cash Flow Statement of A LTD. for the year ended 31st March, 2022.
Particulars	Amount (₹)	Amount (₹)
A. Cash Flow from Operating Activities:
Profit before Tax and Extraordinary Items (W.N.1)		7,000
Add:
Depreciation	18,000
Interest paid on Long-term Borrowings	3,000	21,000
Operating profit before working capital changes		28,000
Add:
Increase in Current Liabilities Trade Payables	2,000
Decrease in Current Assets: Trade Receivables	6,000
Less: Increase in Current Assets Inventory	(4,000)	4,000
Cash generated from operating activities		32,000
Less: Income Tax paid		(15,000)
Net cash from operating activities		17,000
B. Cash flows from Investing Activities:
Purchase of Machinery (W.N.3)	(28,000)
Net Cash used in investing activities		(28,000)
C. Cash Flows from Financing Activities:
Issue of Share Capital		10,000
Increase in Long-term Borrowings	5,000
Less: Interest Paid	(3,000)	2,000
Net Cash from Financing Activities		12,000
Net Decrease in cash and cash equivalents (A + C − B)		1,000
Add: Cash and cash equivalents at the beginning of the period.		4,000
Cash and cash equivalents at the end of the period		5,000

Working Note 1:

Particulars	Amount (₹)
Profit & Loss Balance on 31st March, 2022	33,000
Less: Profit & Loss Balance on 31st March, 2021	41,000
	(8,000)
Add: Transfer to Reserve	3,000
Provision for Taxation (Working Note 2)	12,000
	7,000

Working Note 2:

Dr.	Provision for Tax Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Bank A/c (Payment made) (Given)	15,000	By Balance b/d (Given)	20,000
To Balance c/d (Given)	17,000	By Statement of P & L (Balancing figure, being provision made in 2022)	12,000
	32,000		32,000

Working Note 3:

Dr.	Machinery Account		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	90,000	By Depreciation A/c	18,000
To Bank A/c (Balancing figure, being purchase)	28,000	By Balance c/d (Given)	1,00,000
	1,18,000		1,18,000