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12th | Cash Flow Statement | Question No. 21 To 24 | Ts Grewal Solution 2022-2023

Question 21:


Arthur Ltd. Reported a profit of ` 90,000 for the year ended 31st March, 2020, after considering the following:

 

`

(a) Tax provided during the year

3,000

(b) Amortisation of goodwill

12,000

(c) Profit on sale of land

5,000

(d) Writing off preliminary expenses

200

(e) Machinery costing 40,000 (accumulated depreciation thereon being ` 18,000) was sold during the year at a loss of `17,000.

 

Extract of its Balance Sheet in the beginning and at the end of the year is given below:

Particulars

1st April, 2019

(`)

1st April, 2020

(`)

Accounts Receivable

Stock

Cash at Bank

Accounts Payable

Expenses Payable

Provision for Taxation

Investments (Short-term)

Plant and Machinery (Net value)

Proposed Dividend

16,000

15,000

10,000

11,000

5,000

6,000

2,000

1,30,000

10,000

20,000

12,000

8,000

9,000

6,000

4,000

5,000

94,000

12,000

You are required to calculate Cash Flow from Operating Activities as per Accounting Standard-3 (Show your workings clearly).

Answers;


Cash Flow Statement

 

I.                   Cash  flow from operating activities

(A) Net profit as per Statement of profit and loss

 Add: Proposed dividend

Provision of Tax

 

 

10000

3000

 

90,000

 

13000

Net profit before tax and extraordinary items

Add:

Depreciation on plant and machinery

Goodwill amortised

Loss on sale of machinery

 

 

14000

12000

17000

103000

 

 

 

43000

 

 

146000

Less: Profit on sale of Land

 

(5000)

Operating Profit Before Working Capital Changes

Add:

Stock

Expenses payable

 

 

3000

1000

141000

 

 

4000

 

 

145000

Less:

Accounts receivable

Accounts payable

 

4000

2000

 

 

6000

 

 

139000

Less: Tax paid

 

5000

Cash flow from operating activities

 

134000

 

Working notes:

Dr.

Plant and Machinery A/c

Cr.

Particulars

`

Particulars

`

To Balance B/d

 

1,30,000

By bank a/c (Sale)

By P&L a/c (Loss)

By Depreciation a/c

By Balance C/d

5,000

17,000

14,000

94,000

 

1,30,000

 

1,30,000

Space

Dr.

Provision for Tax A/c

Cr.

Particulars

`

Particulars

`

To Bank a/c

(Tax Paid)

To Balance C/d

5,000

 

4,000

By Balance B/d

By P&L a/c (Loss)

 

6,000

3,000

 

 

9,000

 

9,000

 Question 22:


From the following information, calculate the amount of Cash Flow from Investing Activities Acquired machinery for ` 10,00,000, paying 10% immediately in cash and accepting a draft for the balance in favour of the vendor, payable after three months. (CBSE 2020)

Answer:


Cash Flow From Investing Activity

Particulars

`

Payment for purchase of Machinery

1,00,000

Cash Used in Investing Activity

1,00,000

 

 

 

 

Question 23:


Mars Ltd. has Plant and Machinery whose written down value on 1st April, 2021 was  `9,60,000 and on 31st March, 2022 was  `10,50,000. Depreciation for the year was  `35,000. In the beginning of the year, a part of plant was sold for  `45,000 which had a written down value of  `30,000.
Calculate Cash Flow from Investing Activities

Answer:


Cash Flow from Investing Activities

for the year ended March 31, 2022

 

Particulars

 (`)

 (`)

 

 

Purchase of Plant and Machinery

(1,55,000)

 

 

 

Sale of Plant and Machinery

45,000

 

 

Net Cash Used in Investing Activities

 

(1,10,000)

 

 

Working Notes:

Plant and Machinery Account

Dr.

 

Cr.

Particulars

(`)

Particulars

 (`)

Balance b/d

9,60,000

Depreciation

35,000

Profit and Loss A/c (Profit on Sale)

15,000

Bank A/c (Sale)

45,000

Bank A/c (Purchase)

1,55,000

Balance c/d

10,50,000

 

11,30,000

 

11,30,000

 

 

 

 

 

Question 24:


From the following details. Calculate Cash Flow from Investing Activities

 

 

 

Particulars

31st March,
2022 (
`)

31st March,
2021 (
`)

Investment in 10% Debentures

10,00,000

5,00,000

Land and Building

15,00,000

9,00,000

Additional Information:
1. Half of the investment held in the beginning of the year were sold at 10% profit.
2. Depreciation on Land and Building was  ` 50,000 for the year.
3. Interest received on investments  ` 75,000.

Answer:


Cash Flow from Investing Activities

for the year ended March 31, 2022

 

Particulars

 (`)

 (`)

 

 

Purchase of Land and Building (WN1)

(6,50,000)

 

 

 

Interest received on Investments

75,000

 

 

 

Sale of Debentures (WN2)

2,75,000

 

 

 

Purchase of Debentures (WN2)

(7,50,000)

(10,50,000)

 

Net Cash Used in Investing Activities

 

(10,50,000)

 

Working Notes:

WN1:

Land and Building Account

Dr.

 

Cr.

Particulars

 (`)

Particulars

 (`)

Balance b/d

9,00,000

Depreciation A/c

50,000

Bank A/c (Purchase)

6,50,000

Balance c/d

15,00,000

 

15,50,000

 

15,50,000

 

WN2:

Investment in Debentures Account

Dr.

 

Cr.

Particulars

 (`)

Particulars

 (`)

Balance b/d

5,00,000

Bank A/c (Sale)

2,75,000

Profit and Loss A/c (Profit on sale)

25,000

Balance c/d

10,00,000

Bank A/c (Purchase)

7,50,000

 

 

 

12,75,000

 

12,75,000

 

 

 

 

 

 

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Ts Grewal Solution 2022-2023

Class 12 / Volume – 3

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