Question

Following are the Balance Sheets of X Ltd.:

Particulars	Note No.	31.3.2022 (₹)	31.3.2021 (₹)
I. EQUITY AND LIABILITIES:
(1) Shareholders’ Funds:
(a) Share Capital		2,00,000	2,00,000
(b) Reserves and Surplus	1	72,000	(37,000)
(2) Non-Current Liabilities:
Long-term Borrowings	2	75,000	50,000
(3) Current Liabilities:
(a) Trade Payables		44,000	46,000
(b) Short-term Provision	3	24,000	30,000
Total		4,15,000	2,89,000
II. ASSETS:
(1) Non-Current Assets:
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment	4	62,000	1,40,000
(b) Non-Current Investments		2,000	10,000
(2) Current Assets:
(a) Inventory		2,00,000	60,000
(b) Trade Receivables		1,21,000	56,000
(c) Cash & Bank Balances		30,000	23,000
Total		4,15,000	2,89,000

Notes:

Particulars	31.3.2022 (₹)	31.3.2021 (₹)
(1) Reserve & Surplus:
General Reserve	22,000	-
Profit & Loss Balance	50,000	(37,000)
	72,000	(37,000)
(2) Long-term Borrowings:
Public Deposits	75,000	50,000
(3) Short-term Provision:
Provision for Taxation	20,000	25,000
Provision for Doubtful Debts	4,000	5,000
	24,000	30,000
(4) Property, Plant and Equipment:
Land	-	1,00,000
Plant & Machinery	1,00,000	80 000
Accumulated Depreciation	(38,000)	(40,000)
	62,000	1,40,000

Additional Information:

1. A piece of machinery was sold for ₹ 8,000 during the year 2022. Its original cost was ₹ 20,000 and depreciation of ₹ 15,000 has been provided on it.
2. Investments were sold at a loss of 40%.
3. Land was sold for ₹ 1,50,000. 
4. Interest paid on public deposits amounted to ₹ 6,000.

You are required to prepare a Cash-Flow Statement.

Hint: Non-current investments costing ₹ 8,000 are sold for ₹ 4,800.

Answer 1

Cash Flow Statement of X Ltd. for the year ended 31st March, 2022.
Particulars	Amount (₹)	Amount (₹)
A. Cash Flow from Operating Activities:
Net Profit as per Profit & Loss A/c (W.N.1)		87,000
Add:
Depreciation on Fixed Assets	38,000
Loss on Sale of Investments	2,000
Less: Profit on Sale of Land	(50,000)	(10,000)
Operating Profit before WC Changes		77,000
Less:
Increase in Inventory	(1,40,000)
Increase in Trade Receivables	(65,000)
Decrease in Trade Payables	(2,000)
Decrease in Short-term Provisions	(6,000)	(2,13,000)
Cash Used in Operations		(1,36,000)
Add: Interest Paid on Public Deposits	6,000
Less:
Adjustment for Profit on Machinery (W.N.2)	(3,000)
Balancing Non-Cash Adjustment	(1,800)	1,200
Net Cash used in Operating Activities (A)		(1,34,800)
B. Cash Flow from Investing Activities:
Add:
Sale of Land	1,50,000
Sale of Machinery	8,000
Sale of Investments	4,000	1,62,000
Less:
Purchase of Plant and Machinery	(20,000)
Adjustments (Depreciation/Profit)	(19,200)	(39,200)
Net Cash from Investing Activities (B)		1,22,800
C. Cash Flow from Financing Activities:
Proceeds from Public Deposits	25,000
Less: Interest Paid	(6,000)
Net Cash from Financing Activities (C)		19,000
Net Increase in Cash & Cash Equivalents (A + B + C)		7,000
Add: Opening Balance of Cash and Bank		26,000
Closing Balance of Cash and Bank		33,000

Working Note 1: Calculation of Net Profit.

Particulars	Amount (₹)
Profit & Loss A/c (31.3.2022)	50,000
Profit & Loss A/c (31.3.2021)	(37,000)
Net Profit for the Year	87,000

Working Note 2: Calculation of Sale of Machinery.

Particulars	Amount (₹)	Amount (₹)
Original Cost of Machinery Sold	20,000
Less: Accumulated Depreciation	15,000	5,000
Book Value (WDV)		5,000
Sale Price		(8,000)
Profit on Sale (Non-cash)		(3,000)