Question

The following is the Balance sheet of Garima Ltd. Prepare a cash flow statement.

Particulars	Note No.	31st March 2017 (Rs)	31st March 2016 (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	4,40,000	2,80,000
b) Reserve and surplus (Surplus)	2	40,000	28,000
2. Current Liabilities
a) Trade payables		1,56,000	56,000
b) Short-term provisions (Provision for taxation)		12,000	4,000
Total		6,48,000	3,68,000
II. Assets
1. Non-current assets
Fixed assets
Tangible		3,64,000	2,00,000
2. Current assets
a) Inventories		1,60,000	60,000
b) Trade receivables		80,000	20,000
c) Cash and cash equivalents		28,000	80,000
d) Other current assets (prepaid expenses)		16,000	8,000
Total		6,48,000	3.68,000

Notes to Accounts

Particulars	31st March 2017 (Rs.)	31st March 2016 (Rs.)
1. Share capital
a) Equity share capital	3,00,000	2,00,000
b) Preference share capital	1,40,000	80,000
	4,40,000	2,80,000
2. Reserve and surplus
Surplus in statement of profit and loss at the beginning of the year	28,000
Add: Profit of the year	16,000
Less: Interim Dividend	4,000
Profit at the end of the year	40,000

Additional Information:

1. Depreciation charged during the year Rs. 32,000.

Answer 1

Cash Flow Statement
Particulars		Amount (Rs.)	Amount (Rs.)
A.	Cash flow from Operating Activities
	Net Profit before Taxation and Extraordinary Items (40,000 − 28,000)	12,000
	Adjustments for-
	Add: Depreciation	32,000
	Add: Proposed Dividend (Interim Dividend)	4,000
	Add: Provision for Taxation	12,000
	Net profits before taxation and extraordinary items		28,000
	Operating Profit before Working Capital changes:		60,000
	Add: Increase in Current liabilities
	Trade Payables	1,00,000	(68,000)
	Less: Increase in Current Assets
	Inventories	(1,00,000)
	Other current assets (prepaid expenses)	(8,000)
	Trade receivables	(60,000)
	Cash generated from Operating Activities		(8,000)
	Less: Income Tax paid		(4,000)
	Net Cash used in Operating Activities:		(12,000)
B.	Cash Flow from Investing Activities
	Purchase of Fixed Assets	(1,96,000)
	Net Cash used in Investing Activities		(1,96,000)
C.	Cash Flow from Financing Activities:
	Issue of Equity Shares	1,00,000
	Issue of Preference Shares	60,000
	Less: Dividend Paid	(4,000)
	Net Cash from Financing Activities		1,56,000
D.	Net decrease in cash and cash equivalents (A + B + C)		(52,000)
	Add: Cash and Cash Equivalents at the beginning		80,000
E.	Cash and cash equivalents at the end of the period		28,000

 

Dr.	Plant and Machinery Account						Cr.
Date	Particulars	J.F.	Amount (Rs.)	Date	Particulars	J.F.	Amount (Rs.)
	To Balance b/d		2,00,000		By Depreciation		32,000
	To Bank (Purchases-Balancing fig.)		1,96,000		By Balance c/d		3,64,000
			3,96,000				3,96,000