Question

There was ‘Nil’ net cash flow from operating activities of Ashok Ltd. during the year ending 31^st March, 2019. From the following Balance Sheet of Ashok Ltd. as at 31^st March, 2019, prepare a Cash Flow Statement:

Ashok Ltd. Balance Sheet as at 31st March, 2019
Particulars	Note No.	31.3.2019 (₹)	31.3.2018 (₹)
I. EQUITY AND LIABILITIES:
1. Shareholders’ Funds:
(a) Share Capital		19,00,000	11,00,000
(b) Reserve and Surplus	1	1,60,000	2,00,000
2. Non-Current Liabilities:
Long-term Borrowings	2	1,00,000	4,00,000
3. Current Liabilities:
(a) Short-term Borrowings	3	2,50,000	2,30,000
(b) Short-term Provisions	4	1,90,000	2,70,000
TOTAL		26,00,000	22,00,000
II. ASSETS:
1. Non-Current Assets:
(a) Property, Plant and Equipment and Intangible Assets
(i) Property, Plant and Equipment (Machinery)	5	15,00,000	11,00,000
(ii) Intangible Assets	6	2,80,000	l,70,000
2. Current Assets:
(a) Current Investments (Marketable Securities)		1,30,000	2,90,000
(b) Trade Receivables		3,90,000	4,10,000
(c) Cash at Bank		3,00,000	2,30,000
TOTAL		26,00,000	22,00,000

Notes to Accounts:

Note No.	Particulars	31-3-2019 (₹)	31-3-2018 (₹)
1.	Reserves and Surplus:
	Surplus (Balance in Statement of Profit & Loss)	1,60,000	2,00,000
2.	Long-term Borrowings:
	8% Debentures	1,00,000	4,00,000
3.	Short-term Borrowings:
	Bank Overdraft	2,50,000	2,30,000
4.	Short-term Provisions:
	Provision for Tax	1,90,000	2,70,000
5.	Property, Plant and Equipment:
	Plant & Machinery	16,30,000	11,70,000
	Accumulated Depreciation	(1,30,000)	(70,000)
		15,00,000	11,00,000
6.	Intangible Assets:
	Goodwill	2,80,000	1,70,000

Additional information:

1. A machinery of the book value of ₹ 60,000 (depreciation provided thereon ₹ 20,000) was sold at a loss of ₹ 6,000.
2. 8% Debentures were redeemed on 1^st July, 2018.

Hint. Purchase of Plant & Machinery ₹ 5,40,000

Answer 1

ASHOK LTD.
Cash Flow Statement for the year ending 31st March, 2019.
Particulars	Amount (₹)	Amount (₹)
A. Cash Flow from Operating Activities		Nil
B. Cash Flow from Investing Activities
Add: Proceeds from the Sale of Plant and Machinery		54,000
Less:
Payment for Purchase of Plant and Machinery	(5,40,000)
Payment for Purchase of Goodwill	(1,10,000)	(6,50,000)
Cash Used in Investing Activities (B)		(5,96,000)
C. Cash Flow from Financing Activities:
Add:
Proceeds from the Issue of Share Capital	8,00,000
Increase in Bank Overdraft	20,000	8,20,000
Less:
Redemption of 8% Debentures	(3,00,000)
Payment of Interest on 8% Debentures	(14,000)	(3,14,000)
Cash Flow from Financing Activities (C)		5,06,000
Net Decrease in Cash and Cash Equivalents (A + B + C)		(90,000)
Add: Cash and Cash Equivalents at the beginning of the year
Current Investments	2,90,000
Cash and Cash Equivalents	2,30,000	5,20,000
Cash and Cash Equivalents at the end of the year
Current Investments	1,30,000
Cash and Cash Equivalents	3,00,000	4,30,000

Working Note 1:

Dr.	PLANT AND MACHINERY ACCOUNT		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	11,70,000	By Bank A/c (Sale)	54,000
To Bank A/c	5,40,000	By Loss on Sale of Machinery A/c	6,000
		By Accumulated Depreciation A/c	20,000
		By Balance c/d	16,30,000
Total	17,10,000	Total	17,10,000

Working Note 2:

Dr.	ACCUMULATED DEPRECIATION ACCOUNT		Cr.
Particulars	Amount (₹)	Particulars	Amount (₹)
To Machinery A/c (sold Asset)	20,000	By Balance b/d	70,000
To Balance c/d	1,30,000	By Statement of Profit and Loss	80,000
Total	1,50,000	Total	1,50,000

Working Note 3:

Interest on Debentures
Particulars	Amount (₹)
`4,00,000 xx 8% xx 3/12`	8,000
`1,00,000 xx 8% xx 9/12`	6,000
Total	14,000