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From the Following Balance Sheet of Kiero Ltd. and the Additional Information as on 31-3-2018, Prepare a Cash Flow Statement: - Accountancy

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Sum

From the following Balance Sheet of Kiero Ltd. and the additional information as on 31-3-2018, prepare a Cash Flow Statement:

Kiero Ltd.
Balance Sheet as at 31-03-2018

Particulars Note No.

31-03-18 (₹)

31-03-17 (₹)

I. Equity and Liabilities      
1. Shareholders Funds
     
(a) Share Capital
1 7,90,000 5,80,000
(b) Reserves and Surplus   4,60,000 1,20,000
       
2. Non-Current Liabilities      
Long term Borrowings 2 5,00,000 3,00,000
       
3.Current Liabilities      
(a) Short term borrowings 3 1,15,000 42,000
(b) Short term Provisions 4 1,18,000 46,000
Total   19,83,000 10,88,000
       
II. Assets
     
1. Non-Current Assets
     
Fixed Assets
     
(i) Tangible Assets 5 9,80,000 6,35,000
(ii) Intangible Assets 6 2,68,000 1,70,000
2. Current Assets      
(a) Current Investments
  1,40,000 70,000
(b) Trade Receivables   4,40,000 1,50,000
(c) Cash and Cash Equivalents   1,55,000 63,000

Total

  19,83,000 10,88,000

Notes to Accounts

Note No. Particulars 31-03-18 (₹) 31-03-17 (₹)
1. Reserves and Surplus    
  Surplus (Balance in Statement of Profit and Loss) 3,20,000 60,000
  General Reserve 1,40,000 60,000
    4,60,000 1,20,000
       
2. Long-term Borrowings    
  12% Debentures 5,00,000 3,00,000
    5,00,000 3,00,000
       
3. Short-term Borrowings    
  Bank Overdraft 1,15,000 42,000
    1,15,000 42,000
       
4. Short-term Provisions    
  Provision for Tax 1,18,000 46,000
    1,18,000 46,000
       
5. Tangible Assets    
  Plant and Machinery 11,00,000 7,50,000
  Less:Accumulated Depreciation (1,20,000) (1,15,000)
    9,80,000 6,35,000
       
6. Intangible Assets    
  Goodwill 2,68,000 1,70,000
    2,68,000 1,70,000

Additional Information: 12% debentures were issued on 1st September, 2017.

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Solution

Cash Flow Statement

Particulars Details

Amount(₹)

A. Cash Flow From Operating Activities    
Surplus as on 31st March 2018
3,20,000  
Less: Surplus as on 31st March 2017 (60,000)  
  2,60,000  
Add: Transfer to General Reserve ( 1,40,000 – 60,000) 80,000  
Provision for tax created during the year 1,18,000  
Profit before tax and extraordinary items   4,58,000
Add: Interest on 12% Debentures (3,00,000 × 12% + 2,00,000 × 12% × 7 months) 50,000  
Depreciation for the year ( 1,20,000 – 1,15,000) 5,000 55,000
Operating Profit Before Working Capital Changes   5,13,000
Less: Increase in the value of Trade Receivables ( 4,40,000 – 1,50,000)   (2,90,000)
Cash Generated from Operations   2,23,000
Less: Tax paid (i.e. Provision for tax created during the last year)   (46,000)
Cash Flow From Operating Activities   1,77,000
     
B. Cash Flow From Investing Activities    
Purchase of Plant and Machinery ( 11,00,000 – 7,50,000) (3,50,000)  
Purchase of Goodwill (2,68,000 – 1,70,000) (98,000) (4,48,000)
Cash Used in Investing Activities   4,48,000
     
C. Cash Flow From Financing Activities    
Increase in Bank Overdraft ( 1,15,000 – 42,000) 73,000  
Proceeds from issue of 12% Debentures (5,00,000  – 3,00,000)

2,00,000

 
Proceeds from issue Shares (7,90,000  – 5,80,000) 2,10,000  
Interest on 12% Debentures (3,00,000 × 12% + 2,00,000 × 12% × 7 months) (50,000)  
Cash Flow From Financing Activities   4,33,000
     
D. Net Increase/Decrease in Cash & Cash Equivalents ( A – B + C)   1,62,000
Add: Cash and Cash Equivalents as on 31st March 2017    
Cash & Bank Balance 70,000  
Current Investments 63,000 1,33,000
     
E. Cash and Cash Equivalents as on 31st March 2018    
Cash & Bank Balance 1,55,000  
Current Investments 1,40,000 2,95,000
Concept: Preparation of Cash Flow Statement
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