Question

Following is the Balance Sheet of Mevanca Limited as at 31st March, 2024: Prepare Cash Flow Statement when Cash Flow from Financing Activities is ₹ 2,12,500.

Particulars	Note No.	31.3.2024 (₹)	31.3.2023 (₹)
I. EQUITY AND LIABILITIES:
1. Shareholders’ Funds:
(a) Share Capital		3,00,000	1,00,000
(b) Reserve and Surplus	1	25,000	1,20,000
2. Non-Current Liabilities:
Long-term Borrowings	2	80,000	60,000
3. Current Liabilities:
(a) Trade Payables		6,000	20,000
(b) Short-term Provisions	3	68,000	70,000
TOTAL		4,79,000	3,70,000
II. ASSETS:
1. Non-Current Assets:
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment	4	3,36,000	1,92,000
(2) Current Assets:
(a) Inventories		67,000	60,000
(b) Trade Receivables		51,000	65,000
(c) Cash and Bank Balances		25,000	49,000
(d) Other Current Assets		-	4,000
TOTAL		4,79,000	3,70,000

Notes to Accounts:

Particulars	31st March 2024 (₹)	31st March 2023 (₹)
1. Reserve & Surplus:
Surplus, i.e., Balance in Statement of Profit & Loss	25,000	1,20,000
2. Long-term Borrowings:
10% Long term Loan	80,000	60,000
3. Short-term Provisions:
Provision for Tax	68,000	70,000
4. Property, Plant and Equipment:
Machinery	3,84,000	2,15,000
Accumulated Depreciation	(48,000)	(23,000)
	3,36,000	1,92,000

Additional information:

1. Additional loan was taken on 1st July, 2023.
2. Tax of ₹ 53,000 was paid during the year.
3. Machinery of the book value of ₹ 80,000 (Accumulated Depreciation ₹ 20,000) was sold at a loss of ₹ 18,000.

Hints:

1. Machine with book value of ₹ 80,000 (Accumulated Depreciation ₹ 20,000) has been sold. In other words, machine costing ₹ 1,00,000 has been sold.
2. Machinery purchased ₹ 2,69,000; Current year’s Depreciation ₹ 45,000.

Answer 1

Cash Flow Statement of Mevanca Limited for the year ended 31st March, 2024
Particulars	Amount (₹)	Amount (₹)
A. Cash Flow from Operating Activities:
Net Loss before Tax (25,000 – 1,20,000)		(95,000)
Add:
Depreciation on Machinery (Hint 2)	45,000
Loss on Sale of Machinery (Given)	18,000
Income Tax Expense (See Working Note 1)	51,000	1,14,000
Operating Profit before Working Capital Changes		19,000
Adjustments for non-cash and non-operating items:
Add:
Decrease in Trade Receivables (65,000 – 51,000)	14,000
Decrease in Other Current Assets (4,000 – 0)	4,000	18,000
Less:
Decrease in Trade Payables (20,000 – 6,000)	(14,000)
Increase in Inventory (67,000 – 60,000)	(7,000)	(21,000)
Net Change in Working Capital		(3,000)
Net Cash from Operating Activities (A)		16,000
B. Cash Flow from Investing Activities:
Sale of Machinery (See Working Note 2)	62,000
Purchase of Machinery	(2,69,000)
Net Cash from Investing Activities (B)		(2,07,000)
C. Cash Flow from Financing Activities:
As per Additional Information		2,12,500
Net Cash from Financing Activities (C)		2,12,500
Net Decrease in Cash and Cash Equivalents (A + B + C)		21,500
Add: Opening Cash & Bank Balance (31.03.2023)		1,15,000
Closing Cash & Bank Balance (31.03.2024)		70,500