Question

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 1^st September, 2017.

Answer 1

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