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Question
Following is the Balance Sheet of Mevanca Limited as at 31st March, 2026:
Mevanca Limited
BALANCE SHEET as at 31st March, 2026
| Particulars | Note No. | 31st March, 2026 (₹) | 31st March, 2025 (₹) |
|---|---|---|---|
| I. EQUITY AND LIABILITIES | |||
| 1. Shareholders' Funds | |||
| (a) Share Capital | 3,00,000 | 1,00,000 | |
| (b) Reserves and Surplus | 1 | 25,000 | 1,20,000 |
| 2. Non-Current Liabilities | |||
| Long-term Borrowings (10% Loan from Bank) | 80,000 | 60,000 | |
| 3. Current Liabilities | |||
| (a) Trade Payables | 6,00,000 | 20,000 | |
| (b) Short-term Provisions (Provision for Tax) | 68,000 | 70,000 | |
| Total | 4,79,000 | 3,70,000 | |
| II. ASSETS | |||
| 1. Non-Current Assets | |||
| Property, Plant and Equipment and Intangible Assets: | |||
| Property, Plant and Equipment | 2 | 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 Cash Equivalents | 25,000 | 49,000 | |
| (d) Other Current Assets | ... | 4,00,000 | |
| Total | 4,79,000 | 3,70,000 |
Notes to Accounts
| Particulars | 31st March, 2026 (₹) | 31st March, 2025 (₹) |
|---|---|---|
| 1. Reserves and Surplus | ||
| Surplus, i.e., Balance in Statement of Profit & Loss | 25,000 | 1,20,000 |
| 25,000 | 1,20,000 | |
| 2. Property, Plant and Equipment | ||
| Machinery | 3,84,000 | 2,15,000 |
| Less: Accumulated Depreciation | (48,000) | (23,000) |
| 3,36,000 | 1,92,000 |
- Additional loan was taken on 1st July, 2025.
- Tax of ₹ 53,000 was paid during the year.
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Solution
Cash Flow Statement of Mevanca Limited for the year ended 31st March, 2026
| Particulars | Amount (₹) | Amount (₹) |
|---|---|---|
| A. Cash Flow from Operating Activities | ||
| Net Loss before Tax and Extraordinary Items | (14,500) | |
| Add: Non-Cash and Non-Operating Expenses | ||
| 1. Depreciation provided during the year | 25,000 | |
| 2. Interest on Bank Loan paid during the year | 7,500 | 32,500 |
| Operating Profit before Working Capital Changes | 18,000 | |
| Adjustments for Changes in Working Capital: | ||
| Add: Decrease in Current Assets & Increase in Current Liabilities | ||
| 1. Decrease in Trade Receivables \[(65,000 - 51,000)\] | 14,000 | |
| 2. Decrease in Other Current Assets $(4,000 - 0)$ | 4,000 | |
| Less: Increase in Current Assets & Decrease in Current Liabilities | ||
| 3. Increase in Inventories $(67,000 - 60,000)$ | (7,000) | |
| 4. Decrease in Trade Payables $(6,000 - 20,000)$ | (14,000) | (3,000) |
| Cash Generated from Operations | 15,000 | |
| Less: Income Tax Paid (Given) | (53,000) | |
| Net Cash Used in Operating Activities | (67,500) | |
| B. Cash Flow from Investing Activities | ||
| 1. Payment for Purchase of Machinery | (1,69,000) | |
| Net Cash Used in Investing Activities | (1,69,000) | |
| C. Cash Flow from Financing Activities | ||
| 1. Proceeds from Issue of Share Capital $(3,00,000 - 1,00,000)$ | 2,00,000 | |
| 2. Proceeds from additional Loan from Bank taken | 20,000 | |
| 3. Interest paid on Long-term Bank Loan | (7,500) | |
| Net Cash Flow from Financing Activities | 2,12,500 | |
| Net Decrease in Cash and Cash Equivalents (A + B + C) | (24,000) | |
| Add: Opening Balance of Cash & Cash Equivalents | 49,000 | |
| Closing Balance of Cash & Cash Equivalents | 25,000 |
Working Notes:
1. Calculation of Net Profit / Loss before Tax:
Closing Balance of Surplus (Profit & Loss) = ₹ 25,000
Less: Opening Balance of Surplus (Profit & Loss) = (₹ 1,20,000)
Net Loss during the current year = (₹ 95,000)
Add: Provision for Tax made during the year (See Ledger Account below) = ₹ 50,500
Net Loss before Tax and Extraordinary Items = (₹ 14,500)
2. Provision for Tax Account
| Debit (Particulars) | Amount (₹) | Credit (Particulars) | Amount (₹) |
|---|---|---|---|
| To Bank A/c (Tax Paid) | 53,000 | By Balance b/d (Opening) | 70,000 |
| To Balance c/d (Closing) | 68,000 | By Statement of P&L (Provision Made - Bal. Fig.) | 51,000 |
| Total | 1,21,000 | Total | 1,21,000 |
3. Machinery (Property, Plant and Equipment) Account
| Debit (Particulars) | Amount (₹) | Credit (Particulars) | Amount (₹) |
|---|---|---|---|
| To Balance b/d (Opening) | 2,15,000 | By Balance c/d (Closing) | 3,84,000 |
| To Bank A/c (Purchase - Balancing Figure) | 1,69,000 | ||
| Total | 3,84,000 | Total | 3,84,000 |
4. Calculation of Interest on 10% Bank Loan:
Opening Loan Balance = ₹ 60,000
Additional Loan taken on 1st July, 2025 = ₹ 20,000
Interest on Opening Loan for full year: $10\% \text{ of } 60,000 = ₹ 6,000$
Interest on Additional Loan for 9 months (July to March): $10\% \text{ of } 20,000 \times \frac{9}{12} = ₹ 1,500$
Total Interest Paid = $6,000 + 1,500 = {₹ 7,500}$
