12th | Cash Flow Statement | Question No. 29 To 32 | Ts Grewal Solution 2022-2023

Question 29:

From the following particulars, calculate Cash Flow from Investing Activities


Particulars	Purchased `	Sold `
Machinery	6,20,000	2,00,000
Investments	2,40,000	80,000
Goodwill	1,00,000	...
Patents	...	1,50,000

Additional Information:

1. Interest received on debentures held as investment ` 8,000.

2. Interest paid on debentures issued ` 20,000.

3. Dividend received on shares held as investment ` 20,000.

4. Dividend paid on Equity Share Capital ` 30,000.

5. A plot of land was purchased out of the surplus funds for investment purposes and was let out for commercial use. Rent received ` 50,000 during the year.

Answer:

Cash Flow from Investing Activities
	Particulars	`	`
	Purchase of Machinery	(6,20,000)
	Purchase of Investments	(2,40,000)
	Purchase of Goodwill	(1,00,000)
	Sale of Machinery	2,00,000
	Rent Received	50,000
	Dividend Received	20,000
	Sale of Investments	80,000
	Interest on Debentures	8,000
	Sale of Patents	1,50,000
	Net Cash Used in Investing Activities		(4,52,000)

Note: Dividend paid and interest paid is a part of Financing Activities.

Question 30:

Calculate Cash Flow from Investing Activities from the following information:

Particular	31^st March, 2022 `	31^st March, 2021 `
Investment in Land	3,00,000	3,00,000
Shares in Damodar Ltd.	1,50,000	1,50,000
12% Long-term Investments	80,000	50,000
Plant and Machinery	7,50,000	6,00,000
Patents	70,000	1,00,000
Goodwill	1,50,000	1,00,000

Additional Information:
1. A piece of land was purchased as an investment out of surplus. It was let out for commercial purpose and the rent received was ` 20,000.
2. Dividend received from Damodar Ltd. @ 12%.
3. Patents written off to the extent of ` 20,000. Some patents were sold at a profit of ` 10,000.
4. A machine costing ` 80,000 (depreciation provided thereon ` 30,000) was sold for ` 35,000. Depreciation charged during the year was ` 70,000.
5. During the year 12% investments were purchased for ` 1,00,000 and some investments were sold at a profit of ` 10,000. Interest on investments for the year was duly received.

Answer:

Cash Flow from Investing Activities
	Particulars	`	`
	Purchase of Plant and Machinery	(2,70,000)
	Purchase of Investment	(1,00,000)
	Purchase of Goodwill	(50,000)
	Rent Received	20,000
	Dividend Received (1,50,000 × 12%)	18,000
	Sale of Plant and Machinery	35,000
	Sale of Investment	80,000
	Interest on Investments	6,000
	Sale of Patents	20,000
	Net Cash Used in Investing Activities		(2,41,000)

Working Notes:

WN1 Computation of Interest on Investments

Interest on 12% Long-term Investments = 50,000×12/100=6,000

WN2

Patents Account
Dr.		Cr.
Particulars	`	Particulars	`
Balance b/d	1,00,000	Profit and Loss A/c (Written-off)	20,000
Profit and Loss A/c (Profit on Sale)	10,000	Bank A/c (Sale- Bal. Fig.)	20,000
		Balance c/d	70,000
	1,10,000		1,10,000

WN3

12% Long-Term Investments Account
Dr.		Cr.
Particulars	`	Particulars	`
Balance b/d	50,000	Bank A/c (Sale- Bal. Fig.)	80,000
Bank A/c (Purchase)	1,00,000	Balance c/d	80,000
Profit and Loss A/c (Profit on Sale)	10,000
	1,60,000		1,60,000

WN3

Plant and Machinery Account
Dr.		Cr.
Particulars	`	Particulars	`
Balance b/d	6,00,000	Depreciation A/c	70,000
Bank A/c (Purchase- Bal. Fig.)	2,70,000	Bank A/c (Sale)	35,000
		Profit and Loss A/c (Loss on Sale)	15,000
		Balance c/d	7,50,000
	8,70,000		8,70,000

Question 31:

From the following information, calculate Cash Flow from Operating Activities and Investing Activities:

Particulars

31st March, 2021 `

31st March, 2022 `

Surplus, i.e., Balance in Statement of Profit and Loss

Provision for Tax

Trade Payables .

Current Assets (Inventories and Trade Receivables)

Fixed Assets (Net)

1,00,000

30,000

40,000

4,60,000

3,25,000

4,00,000

30,000

1,50,000

5,20,000

3,92,000

Additional Information:

1. Depreciation of ` 80,000 was provided and a machine costing ` 1,05,000 (Depreciation provided thereon ` 65,000) was sold at a loss of ` 8,000.

2. Tax paid during the year ` 30,000.

Answer:

Cash Flow Statement
I. Cash flow from operating activities (A) Net profit as per Statement of profit and loss (4,00,000-1,00,000) Add: Provision of Tax		3,00,000 30,000
Net profit before tax and extraordinary items Add: Depreciation on Fixed assets Loss on sale of Fixed Assets	80,000 8,000	3,30,000 , 88,000
Operating Profit Before Working Capital Changes Add: Trade Payable		4,18,000 1,10,000
		5,28,000
Less: Current Assets (5,20,000-4,60,000)	1	60,000
Cash Generated from operation		4,68,000
Less: Tax paid		30,000
Cash flow from operating activities		4,38,000
I. Cash flow from Investing activities Proceeds From Sale of Fixed Assets Payments for the purchase of Fixed Assets		32,000 (1,87,000)
Cash Used in Investing activities		1,55,000

Working notes:

Dr.	Fixed Assets A/c		Cr.
Particulars	`	Particulars	`
To Balance B/d To Bank a/c (Purchase)	3,25,000 1,87,000	By bank a/c (Sale) By P&L a/c (Loss) By Depreciation a/c By Balance C/d	32,000 8,000 80,000 3,92,000
	5,12,000		5,12,000

Space

Dr.	Provision for Tax A/c		Cr.
Particulars	`	Particulars	`
To Bank a/c (Tax Paid) To Balance C/d	30,000 30,000	By Balance B/d By P&L a/c (Tax Provided)	30,000 30,000
	1,30,000		1,30,000

Question 32:

From the following information, calculate Cash Flow from Financing Activities:

1st April,
2021 `

31st March,
2022

Long-term Loan

2,00,000

2,50,000

During the year, the company repaid a loan of `1,00,000.

Answer:

	Cash Flow Statement
Particulars		`	`
Cash Flow from Financing Activities
Loan Repaid		(1,00,000)
New Loan Raised		1,50,000	50,000
Cash Flows from Financing Activity			50,000

Working Notes:

Long Term Loan Account
Dr.		Cr.
Particulars	`	Particulars	`
Bank A/c (Repayment of Loan)	1,00,000	Balance b/d	2,00,000
Balance c/d	2,50,000	Bank A/c (Loan Raised)	1,50,000
	3,50,000		3,50,000