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Question
Calculate Cash Flows from Operating and Investing Activities on the basis of the information given in the Balance Sheet of Pari Ltd. as at 31st March, 2024:
| Particulars | Note No. | 31st March, 2024 (₹) | 31st March, 2023 (₹) |
|---|---|---|---|
| I. EQUITY AND LIABILITIES | |||
| 1. Shareholders' Funds | |||
| (a) Share Capital | 10,00,000 | 5,00,000 | |
| (b) Reserves and Surplus | 1 | 5,00,000 | 3,00,000 |
| 2. Non-Current Liabilities | |||
| Long-term Borrowings | 2 | 4,00,000 | 4,00,000 |
| 3. Current Liabilities | |||
| (a) Short-term Borrowings | 3 | ... | 1,00,000 |
| (b) Short-term Provisions | 4 | 1,00,000 | 50,000 |
| Total | 20,00,000 | 13,50,000 | |
| II. ASSETS | |||
| 1. Non-Current Assets | |||
| (a) Property, Plant and Equipment and Intangible Assets | 7,00,000 | 3,00,000 | |
| (b) Non-Current Investments | 4,00,000 | 1,00,000 | |
| 2. Current Assets | |||
| (a) Inventories | 2,00,000 | 2,50,000 | |
| (b) Trade Receivables | 3,00,000 | 4,00,000 | |
| (c) Cash and Cash Equivalents | 4,00,000 | 3,00,000 | |
| Total | 20,00,000 | 13,50,000 |
Notes to Accounts
| Particulars | 31st March, 2024 (₹) | 31st March, 2023 (₹) |
|---|---|---|
| 1. Reserves and Surplus | ||
| General Reserve | 2,00,000 | 1,50,000 |
| Surplus, i.e., Balance in Statement of Profit & Loss | 3,00,000 | 1,50,000 |
| 5,00,000 | 3,00,000 | |
| 2. Long-term Borrowings | ||
| 10% Debentures | 4,00,000 | 4,00,000 |
| 3. Short-term Borrowings | ||
| Bank Overdraft | ... | 1,00,000 |
| 4. Short-term Provisions | ||
| Provision for Taxation | 1,00,000 | 50,000 |
Ledger
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Solution
| Cash Flow Statement | ||
|---|---|---|
| Particulars | Amount (₹) | Amount (₹) |
| I. Cash Flow from Operating Activities | ||
| Net Profit before Tax and Extraordinary Items | 3,00,000 | |
| Add: Non-Cash and Non-Operating Expenses | ||
| 1. Interest on 10% Debentures \[(10\% \text{ on } ₹ 4,00,000)\] | 40,000 | |
| Operating Profit before Working Capital Changes | 3,40,000 | |
| Adjustments for Changes in Working Capital: | ||
| 1. Add: Decrease in Inventories $(2,50,000 - 2,00,000)$ | 50,000 | |
| 2. Add: Decrease in Trade Receivables $(4,00,000 - 3,00,000)$ | 1,00,000 | 1,50,000 |
| Cash Generated from Operations | 4,90,000 | |
| Less: Income Tax Paid (Assumed equal to opening provision - Note 2) | (50,000) | |
| Net Cash Flow from Operating Activities | 4,40,000 | |
| II. Cash Flow from Investing Activities | ||
| 1. Payment for Purchase of Property, Plant & Equipment $(7,00,000 - 3,00,000)$ | (4,00,000) | |
| 2. Payment for Purchase of Non-Current Investments $(4,00,000 - 1,00,000)$ | (3,00,000) | |
| Net Cash Used in Investing Activities | (7,00,000) | |
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