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From the Following Balance Sheet of Samta Ltd., as at 31st March, 2019, Prepare Cash Flow Statement: - Accountancy

Numerical

From the following Balance Sheet of Samta Ltd., as at 31st March, 2019, prepare Cash Flow Statement:

Particulars

Note No.

31st March, 2019

(₹)

31st March,
2018

(₹)

I. EQUITY AND LIABILITIES      

1. Shareholders' Funds

     

(a) Share Capital

1 7,50,000 7,50,000

(b) Reserves and Surplus

2 3,10,000 (20,000)

2. Non-Current Liabilities

     

 Long-term Borrowings (8% Debentures)

  2,60,000 1,50,000

3. Current Liabilities

     

(a) Short-term Borrowings (8% Bank Loan)

  40,000 50,000

(b) Trade Payables

  1,20,000 1,10,000

(c) Short-term Provisions

3 50,000 40,000

Total

  15,30,000 10,80,000
II. ASSETS      

1. Non-Current Assets

     

 (a) Fixed Assets:

     

   (i) Tangible Assets (Net)

 

8,60,000

6,20,000

  (ii) Intangible Assets (Goodwill)

  15,000 40,000

(b) Non-Current Investments

  1,25,000 80,000

2. Current Assets

     

  (a) Current Investments

  5,000 15,000

  (b) Inventories

  1,95,000 1,00,000

  (c) Trade Receivables

  2,00,000 2,00,000

  (d) Cash and Cash Equivalents

  1,30,000 25,000

Total

  15,30,000 10,80,000

Notes to Accounts

Particulars

31st March, 2019

(₹)

31st March, 2018

(₹)

1. Share Capital    
    Equity Share Capital

5,50,000

4,50,000

   12% Preference Share Capital

2,00,000

3,00,000

 

7,50,000

7,50,000

2. Reserves and Surplus    
    Securities Premium Reserve

10,000

...

    General Reserve

1,50,000

1,20,000

    Surplus, i.e., Balance in Statement of Profit and Loss

1,50,000

(1,40,000)

 

3,10,000

(20,000)

4. Short-term Provisions    
    Provision for Tax

50,000

40,000

Additional Information :  
(i) During the year a piece of machinery costing ₹ 60,000 on which depreciation charged was ₹ 20,000 was sold at 50% of its book value. Depreciation provided on tangible Assets ₹ 60,000;
(ii) Income tax ₹ 45,000 was provided;
(iii) Additional Debentures were issued at par on 1st October, 2018 and Bank Loan was repaid on the same date;
(iv) At the end of the year Preference Shares were redeemed at a premium of 5%.

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Solution

 

Cash Flow Statement 

for the year ended March 31, 2019

 

Particulars

Amount

(₹)

Amount

(₹)

A

Cash Flow from Operating Activities

 

 

 

Profit as per Statement of Profit and Loss [1,50,000 − (−1,40,000)]

2,90,000

 

 

Provision for Tax

45,000

 

 

General Reserve

30,000

 

 

Profit Before Taxation

 

3,65,000

 

Items to be Added:

 

 

 

Depreciation on Fixed Assets

60,000

 

 

Loss on Fixed Assets

20,000

 

 

Interest on Debentures (6,000 + 10,400)

16,400

 

 

Interest on Bank Loan (2,000 + 1,600)

3,600

 

 

Premium on Redemption of Preference Shares

5,000

 

 

Goodwill written off

25,000

1,30,000

 

Operating Profit before Working Capital Adjustments

 

4,95,000

 

Less: Increase in Current Assets

 

 

 

 

      Inventories

    (95,000)

 

 

Add: Increase in Current Liabilities

 

 

 

       Trade Payables

10,000

(85,000)

 

Cash Generated from Operations

 

4,10,000

 

Less: Tax Paid

 

(35,000)

 

Net Cash Flows from Operating Activities

 

3,75,000

 

 

 

 

 

B

Cash Flow from Investing Activities

 

 

 

 

Sale of Fixed Assets

20,000

 

 

 

Purchase of Fixed Assets

(3,40,000)

 

 

 

Purchase of Investment

(45,000)

 

 

Net Cash Used in Investing Activities

 

(3,65,000)

 

 

 

 

C

Cash Flow from Financing Activities

 

 

 

Proceeds from Issue of Share Capital

1,00,000

 

 

Proceeds from Issue of Debentures

       1,10,000

 

 

Interest on Debentures Paid

       (16,400)

 

 

Redemption of Preference Share Capital

(1,00,000)

 

 

Premium on Redemption of Preference Share Capital

(5,000)

 

 

Security Premium Reserve

10,000

 

 

Repayment of Bank Loan

(10,000)

 

 

Interest on Bank Loan Paid

(3,600)

 

 

Net Cash Flow from Financing Activities

 

85,000

D

Net Increase in Cash and Cash Equivalents

 

95,000

 

 

Add: Cash and Cash Equivalent in the beginning of the period (25,000+15,000)

 

40,000

 

Cash and Cash Equivalents at the end of the period (1,30,000+5,000)

 

1,35,000

Working Notes:

WN1:

Fixed Assets Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Balance b/d

6,20,000

Bank A/c (Sale) (40,000×50%)

20,000

Bank A/c (Purchase- Bal. Fig.)

3,40,000

Depreciation

60,000

 

 

Profit and Loss A/c (Loss on Sale)

20,000

 

 

Balance c/d

8,60,000

 

9,60,000

 

9,60,000

WN2:

Provision for Taxation Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

Bank A/c (Tax Paid) (Bal. Fig.)

35,000

Balance b/d

40,000

Balance c/d

50,000

Profit and Loss A/c

45,000

 

85,000

 

85,000

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 58 | Page 120
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