Question

From the following Balance Sheets of XY Ltd., prepare a Cash-Flow Statement for the year ended 31^st March, 2024:

Particulars	Note No.	31.3.2024 (₹)	31.3.2023 (₹)
I. EQUITY AND LIABILITIES:
(1) Shareholders’ Funds:
(a) Share Capital		10,00,000	8,00,000
(b) Reserves and Surplus	1	6,40,000	5,59,000
(2) Non-Current Liabilities :
Long-term Borrowings	2	1,50,000	1,00,000
(3) Current Liabilities:
Trade Payables		60,000	40,000
Total		18,50,000	14,99,000
II. ASSETS:
(1) Non-Current Assets:
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment		7,50,000	5,10,000
(ii) Intangible Assets		15,000	20,000
(b) Non-Current Investments	3	1,00,000	30,000
(2) Current Assets:
(a) Inventory		6,30,000	4,20,000
(b) Trade Receivables		3,20,000	4,94,000
(c) Cash & Bank Balances		28,000	20,000
(d) Other Current Assets	4	7,000	5,000
Total		18,50,000	14,99,000

Notes:

Particulars	31.3.2024 (₹)	31.3.2023 (₹)
(1) Reserve & Surplus:
General Reserve	5,20,000	4,00,000
Profit & Loss Balance	1,20,000	1,59,000
	6,40,000	5,59,000
(2) Long-term Borrowings:
8% Debentures	1,50,000	1,00,000
(3) Rate of Interest on Non-Current Investment is 10% p.a.
(4) Other Current Assets:
Prepaid Expenses	4,000	-
Accrued Income	3,000	5,000
	7,000	5,000

Additional Information:

1. Depreciation of ₹ 30,000 has been charged on machinery. 
2. Non-current investments costing ₹ 30,000 were sold for ₹ 40,000 at the end of the year.
3. New debentures were issued on 1^st October, 2023. 
4. During the year, share issue expenses amounted to ₹ 10,000 and these were written off from Statement of Profit & Loss.

Note: It has been assumed that non-current investments have been purchased at the end of the accounting year, i.e., on 31st March, 2024.

Answer 1

Cash Flow Statement of  XY Ltd. For the year ended 31st March, 2024.
Particulars	Amount (₹)	Amount (₹)
A. Cash Flow from Operating Activities:
Net Profit before Tax (W.N. 1)		3,61,000
Add:
Depreciation on Machinery	30,000
Loss on Sale of Non-Current Investment	10,000
Share Issue Expenses Written Off	10,000	50,000
Operating Profit before Working Capital Changes		4,11,000
Less:
Increase in Inventory	(2,10,000)
Increase in Trade Receivables	(26,000)
Increase in Other Current Assets	(2,000)
Add: Increase in Trade Payables	20,000	(2,18,000)
Cash Generated from Operations		1,93,000
Less:
Loss on Sale of Investment	(10,000)
Share Issue Expenses Written Off	(10,000)
Dividend Paid (Assumed from adjustments)	(68,000)	(88,000)
Net Cash from Operating Activities (A)		1,05,000
B. Cash Flow from Investing Activities:
Add:
Purchase of Machinery (W.N. 2)	(2,70,000)
Purchase of Non-Current Investments (W.N.3)	(97,000)	(3,67,000)
Sale of Non-Current Investments		40,000
Net Cash Used in Investing Activities (B)		(3,27,000)
C. Cash Flow from Financing Activities:
Proceeds from the Issue of Share Capital	2,00,000
Proceeds from the Issue of Debentures	50,000	2,50,000
Less: Share Issue Expenses (W.N. 4)		(20,000)
Net Cash from Financing Activities (C)		2,30,000
Net Increase in Cash and Cash Equivalents (A + B + C)		8,000
Add: Opening Balance of Cash and Cash Equivalents		1,94,000
Closing Balance of Cash and Cash Equivalents		2,02,000

Working Note 1: Calculation of Net Profit before Tax.

Particulars	Amount (₹)
Closing Balance of Statement of Profit & Loss	5,20,000
Less: Opening Balance of Statement of Profit & Loss	(1,59,000)
Net Profit before Tax	3,61,000

Working Note 2: Calculation of Purchase of Machinery.

Particulars	Amount (₹)	Amount (₹)
Closing Balance of Machinery		7,50,000
Less: Opening Balance of Machinery	(5,10,000)
Add: Depreciation during the year	(30,000)
Adjusted Opening Balance	(5,40,000)	(5,40,000)
Purchase of Machinery		2,10,000
Add:
Cost of Machinery Sold	40,000
Loss on Sale of Machinery	10,000	50,000
Total Purchase of Machinery		2,70,000

Working Note 3: Calculation of Purchase of Investments.

Particulars	Amount (₹)
Closing Balance of Investments	1,00,000
Less:
Opening Balance of Investments	(30,000)
Adjustment for Net Change (balancing figure)	(13,000)
Add: Cost of Investment Sold	40,000
Total Purchase of Investments	97,000

Working Note 4: Calculation of Share Issue Expenses

Particulars	Amount (₹)
Share Issue Expenses written off from P&L	10,000
Add: Additional amount paid during the year	10,000
Total Share Issue Expenses paid (cash outflow)	20,000