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Calculate Net Cash Flow from Operating Activities and Financing Activities: - Accountancy

Numerical

From the following information, calculate Net Cash Flow from Operating Activities and Financing Activities:

Particular

31st March

2019

(₹)

31st March

2018

(₹)
Equity Share Capital

13,75,000

11,25,000
5% Preference Share Capital 5,00,000 7,50,000
General Reserve 3,75,000 3,00,000
Surplus i.e., Balance in Statement of Profit and Loss 3,75,000 (3,50,000)
Securities Premium Reserve 25,000 ...
Provision for Tax 1,00,000 50,000
Non-current Liabilities (8% Debentures) 6,50,000 3,75,000
Short-term Borrowings (8% Bank Loan) 1,00,000 1,25,000
Trade Payables 5,00,000 2,50,000
Trade Receivables and Inventories

13,00,000

11,50,000

Additional Information:
(i) During the year additional debentures were issued at par on 1st October and Bank Loan was repaid on the same date.
(ii) Dividend on Equity Shares @ 8% was paid on Opening Balance.
(iii) Income tax ₹ 1,12,500 has been provided during the year.
(iv) Preference shares were redeemed at par at the end of the year.

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Solution

Cash Flow Statement

 

Particulars

Amount

(₹)

Amount

(₹)

 

Cash Flow from Operating Activities

 

 

 

Profit as per Statement of Profit and Loss

 

7,25,000

 

Items to be Added:

 

 

 

Dividend on Equity Shares

90,000

 

 

Dividend on Preference Shares

37,500

 

 

Interest on Debentures

41,000

 

 

Interest on Bank Loan

9,000

 

 

Provision for Tax

1,12,500

 

 

Transfer to General Reserve

75,000

3,65,000

 

Operating Profit before Working Capital Adjustments

 

10,90,000

 

Less: Increase in Current Assets

 

 

 

  Trade Receivables& Inventories

(1,50,000)

 

 

Add: Increase in Current Liabilities

 

 

 

Trade Payables

2,50,000

1,00,000

 

Cash Generated from Operations

 

11,90,000

 

Less: Taxes Paid

 

62,500

 

Cash Flow from Operating Activities

 

11,27,500

 

Cash Flow Statement

 

Particulars

Amount

(₹)

Amount

(₹)

 

Cash Flow from Financing Activities

 

 

 

Dividend on Equity Shares

(90,000)

 

 

Dividend on Preference Shares

(37,500)

 

 

Interest on Debentures

(41,000)

 

 

Interest on Bank Loan

(9,000)

 

 

Increase in Securities Premium Reserve

25,000

 

 

Proceeds from Issue of Equity Shares

2,50,000

 

 

Proceeds from Issue of Debentures

2,75,000

 

 

Redemption of Preference Shares

(2,50,000)

 

 

Repayment of Bank Loan

(25,000)

 

 

Cash Flows from Financing Activity

 

97,500

Working Notes

Provision for Tax Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Bank A/c (Bal. fig.)

62,500

Balance b/d

50,000

Balance c/d

1,00,000

Profit & Loss A/c

1,12,500

 

1,62,500

 

1,62,500

Calculation of Interest on Debentures :
`3,75,000 xx 8/100 = 30,000`

`2,75,000 xx 8/100 xx 6/12 =  11,000`

Total Interest = 41,000 ( 30,000 + 11,000 )

Calculation of Interest on Bank Loan :
`1,25,000 xx 8/100 xx 6/12 = 5,000`

`1,00,000 xx 8/100 xx 6/12 = 4,000`

Total Interest = 9,000 ( 5,000 + 4,000 )

Concept: Preparation of Cash Flow Statement
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APPEARS IN

TS Grewal Class 12 Accountancy - Analysis of Financial Statements
Chapter 4 Cash Flow Statement
Exercise | Q 38 | Page 102
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