Question

                    You are required to prepare a Cash-Flow Statement (as per AS-3)
                          for the year 2016-17 from the following Balance Sheet.
                                    Balance Sheet of Honesty Ltd.
                          As at 31st March, 2016 and 31st March, 2017

I	Particulars	Note No.	31.03.2017	31.03.2017
1.	EQUITY AND LIABILITIES Shareholders Funds (a) Share Capital (Equity Share Capital) (b) Reserves and Surplus (Statement of P/L)	1.	14,00,000   5,00,000	10,00,000 4,00,000
2.	Non-Current Liabilities Long Term Borrowing (10% Debentures)		5,00,000	1,40,000
3.	Current Liabilities (a) Short Term Borrowings (Bank Overdraft)   (b) Trade Payables (Creditors) (c) Short Term Provisions		20,000 1,00,000 60,000	30,000 60,000 30,000
	TOTAL		25,80,000	16,60,000
II 1.	ASSETS Non-Current Assets Fixed Assets  (i) Tangible  (ii) Intangible (Goodwill)	2.	16,00,000 1,40,000	9,00,000 2,00,000
2.	Current Assets (a) Inventories (b) Trade Receivables  (c) Cash and Bank Balances (Cash at Bank)		2,50,000 5,00,000 90,000	2,00,000 3,00,000 60,000
	TOTAL		25,80,000	16,60,000

Notes to Accounts:

Particulars	31.03.2017	31.03.2016
1. Short term provisions provision for taxation	60,000	30,000
2. Fixed Assets (Tangible) Plant and Machinery  Less Accumulated Depreciation	17,60,000 (1,60,000)	10,00,000 (1,00,000)
	16,00,000	9,00,000

During the year 2016-17:
(i) A part of the machine, costing Rs. 50,000, accumulated depreciation thereon being Rs. 20,000, was sold for
Rs.18,000.
(ii) Tax paid Rs. 20,000.
(iii) Interest of Rs. 50,000 paid on Debentures.

Answer 1

Working Note 1.

                                 Accumulated Depreciation A/c

Particulars	Amount	Particulars	Amount
To P/M	20,000	By Bal b/d	1,00,000
To Bal c/d	1,60,000	By Depreciation	80,000
	1,80,000		1,80,000

Working Note 2.

                                        Provision for Taxation A/c

Particulars	Amount	Particulars	Amount
To Cash	20,000	By Bal b/d	30,000
To Bal c/d	60,000	By Statement of P/L	50,000
	80,000		80,000

Working Note 3.

                                               Plant and Machinery A/c

Particulars	Amount	Particulars	Amount
To Cash	10,00,000	By Acc. Depreciation	20,000
To Bal c/d	8,10,000	By Statement of P/L	18,000
		By Loss on sale	12,000
		By Bal c/d	17,60,000
	18,10,000		18,10,000

Working Note 4.

Particulars	Rs.
Net Profit for the year	1,00,000
Add provision for Tax	50,000
Net Profit before Tax	1,50,000

                                  Cash Flow Statement of Honesty Ltd.
                                      for the year ending 31.03.2

I	Particular	Rs.	Rs.	Rs.
	Cash Flows from operating activities
	Net Profit before Tax		1,50,000
	Add non-operating/non-cash expenses		60,000
	Goodwill written off		80,000
	Depreciation P/M		12,000
	Loss on sale of P/M		50,000
	Interest on Debentures
	Net Operating Profit before working capital charges		3,52,000
	Add Trade Payables   Less Inventory Less Trade Receivable	40,000 (50,000) (2,00,000)	(2,10,000)
	Cash Flow from operating activities before tax paid Less Tax Paid		1,42,000     (20,000)
	Cash Flow from operating activities			1,22,000
II	Cash Flows from Investing Activities		18,000
	Sale of P/M		(8,10,000)
	Purchase of P/M
	Cash used in Inv. Activities			(7,92,000)
III	Cash Flows from Financing Activities
	Issue of Share Capital		4,00,000
	Issue of Debentures		3,60,000
	Interest on Deb. paid		(50,000)
	Bank overdraft repaid		(10,000)
	Cash Flow from Financing Activities
	Net increase in Cash as per I, II and III Add Op Cash & Cash Equivalent			7,00,000 30,000
	Cash at Bank			60,000
	Closing Cash and Cash Equivalent 90,000		90,000
			90,000	90,000