12th | Cash Flow Statement | Question No. 49 To 52 | Ts Grewal Solution 2022-2023

Question 49:

From the following Balance Sheet of JY Ltd. as at 31st March 2017, prepare a Cash Flow Statement:

BALANCE SHEET as at 31st March, 2017
Particular	Note No.	31st March, 2017 (₹)	31st March, 2016 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital		5,00,000	5,00,000
(b) Reserves and Surplus	1	1,00,000	(25,000)
2. Non-Current Liabilities
Long-term Borrowings	2	2,50,000	1,50,000
3. Current Liabilities
(a) Short-term Borrowings	3	1,50,000	1,10,000
(b) Short-term Provisions	4	1,25,000	75,000
Total		11,25,000	8,00,000
II. ASSETS
1. Non-Current Assets
Fixed Assets Tangible	5	6,00,000	4,50,000
2. Current Assets
(a) Trade Receivables		2,75,000	2,25,000
(b) Cash and Cash Equivalents		50,000	25,000
(c) Short-term Loans and Advances		2,00,000	1,00,000
Total		11,25,000	8,00,000

Notes to Accounts

Particular		31^st March, 2017 (₹)	31^st March, 2016 (₹)
1.	Reserves and Surplus
	Surplus, i.e., Balance in Statement of Profit and Loss	1,00,000	(25,000)
		1,00,000	(25,000)
2.	Long-term Borrowings
	10% Debentures	2,50,000	1,50,000
		2,50,000	1,50,000
3.	Short-term Borrowings
	Bank Overdraft	1,50,000	1,00,000
		1,50,000	1,00,000
4.	Short-term Provisions
	Provision for Tax	1,25,000	75,000
		1,25,000	75,000
5.	Tangible Assets
	Machinery	7,37,500	5,25,000
	Accumulated Depreciation	(1,37,500)	(75,000)
		6,00,000	4,50,000

Note: Proposed Dividend for the years ended 31st March, 2016 and 2017 are `. 50,000 and `. 75,000 respectively.

Additional Information: `. 1,00,000, 10% Debentures were issued on 31st March, 2017.

Answer:

Cash flow Statement
for the year ended 31^st March, 2017
Particulars	Amount (`)	Amount (`)
A. Cash Flow from Operating Activities
Closing Balance of Surplus i.e. Statement of Profit and Loss	1,00,000
Less: Opening Balance of Surplus i.e. Statement of Profit and Loss	(25,000)
	1,25,000
Add: Provision for Tax made	1,25,000
Proposed Dividend paid as on 31^st March, 2016	50,000
Net Profit before tax and extraordinary items	3,00,000
Add: Depreciation charged during the year	62,500
Interest paid on 10% debentures	15,000
Net Profit before Working Capital changes	3,77,500
Less: Increase in Trade Receivables	(50,000)
Net Profit before tax	3,27,500
Less: Tax Paid during the year	75,000
Cash flow from Operating Activities		2,52,500
B. Cash flow from Investing Activities
Purchase of Machinery	(2,12,500)
Short term loans and advances given	(1,00,000)
Cash used in Investing Activities		(3,12,500)
C. Cash flow from Financing activities
Proceeds from issue of 10% debentures	1,00,000
Increase in the Bank Overdraft	50,000
Interest paid on debentures	(15,000)
Proposed Dividend paid	(50,000)
Cash flow from financing activities		85,000
Net Increase in Cash and Cash Equivalents		25,000
Add: Cash and Cash Equivalents at the beginning of the year		25,000
Cash and Cash Equivalents at the end of the year		50,000

Note: Proposed Dividend Treatment is as per AS-4.

Question 50:

Following is the Balance Sheet of X Ltd.;

Particulars	Note No.	31st March, 2022 (`)	31st March, 2021 (`)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital	1	6,00,000	5,50,000
(b) Reserves and Surplus:	2	1,28,000	70,000
3. Current Liabilities
(a) Trade Payables		1,22,000	88,000
(b) Short-term Provisions	3	50,000	40,000

Total		9,00,000	7,48,000
II. ASSETS
1. Non-Current Assets
Fixed Assets (i) Tangible Assets (Net) (ii) Intangible Assets (Goodwill)		3,70,000 90,000	2,80,000 1,15,000
2. Current Assets
(a) Current Investment		10,000	15,000
(b) Inventories		1,82,000	1,00,000
(c) Trade Receivables		1,57,000	1,57,000
(d) Cash and Cash Equivalents		91,000	81,000
Total		9,00,000	7,48,000

Notes to Accounts;

Particular		31^st March 2022 (`)	31^st March 2021 (`)
1.	Share Capital
	Equity share Capital	5,00,000	4,00,000
	10% preference share Capital	1,00,000	1,50,000
		6,00,000	5,50,000
2.	Reserves and surplus
	Securities premium reserves	10,000	-
	General reserves	70,000	40,000
	Surplus i.e., Balance in Statement of Profit and Loss	48,000	30,000

		1,28,000	70,000
3.	Short-term Provisions
	Provision for Tax	50,000	40,000
		50,000	40,000

Additional Information:

1. Proposed dividend for the years ended 31st March, 2020 and 2019 were `60,000 and `50,000 respectively.

2. A machine costing `50,000 (depreciation provided thereon `30,000) was sold for `10,000.

3. Depreciation charged during the year was `20,000.

4. Interim dividend paid `20,000.

5. Income Tax paid `35,000.

Prepare a Cash Flow Statement for the year ended 31st March, 2020, complying with AS-3 (Revised).

Answer:

Cash flow Statement
for the year ended 31^st March, 2022
Particulars	(`)	(`)
A. Cash Flow from Operating Activities
Closing Balance of Surplus i.e. Statement of Profit and Loss		48,000
Less: Opening Balance of Surplus i.e. Statement of Profit and Loss		(30,000)
		18,000
Add: Amount Transferred to General reserve ( 70,000 - 40,000 ) Proposed Dividend paid as on 31^st March, 2019	30,000 50,000
Interim dividend Provision of Tax	20,000 45,000	1,45,000
Net Profit before tax and extraordinary items		1,63,000
Add: Depreciation charged during the year	20,000
Goodwill Amortised Loss on Sale of Machinery	25,000 10,000	55,000
Net Profit before Working Capital changes		2,18,000
Add: Increase in Current assets and Decrease in Current liabilities
Increase in Trade Payables		34,000
		2,52,000
Add: Increase in Current Liabilities and Decrease in Current Assets Increase Inventories		(82,000)
Cash Generated From operation		1,70,000
Less: Tax Paid during the year		(35,000)
Cash flow Extraordinary items (-/+) Extraordinary items (Related to Operating)		1,35,000 ------
Cash flow from Operating Activities		1,35,000

B. Cash flow from Investing Activities
Purchase of Machinery	(2,12,500)
Short term loans and advances given	(1,00,000)
Cash used in Investing Activities		(3,12,500)
C. Cash flow from Financing activities
Proceeds from issue of 10% debentures	1,00,000
Increase in the Bank Overdraft	50,000
Interest paid on debentures	(15,000)
Proposed Dividend paid	(50,000)
Cash flow from financing activities		85,000
Net Increase in Cash and Cash Equivalents		25,000
Add: Cash and Cash Equivalents at the beginning of the year		25,000
Cash and Cash Equivalents at the end of the year		50,000

Working notes:

Dr.	Plant and Machinery A/c		Cr.
Particulars	`	Particulars	`
To Balance B/d To Bank a/c (Purchase)	28,00,000 1,30,000	By bank a/c (Sale) By P&L a/c (Loss) By Depreciation a/c By Balance C/d	10,000 10,000 20,000 3,70,000
	4,10,000		4,10,000

Space

Dr.	Provision for Tax A/c		Cr.
Particulars	`	Particulars	`
To Bank a/c (Tax Paid) To Balance C/d	35,000 50,000	By Balance B/d By P&L a/c (Tax Provided during the year )	40,000 45,000
	85,000		85,000

Question 51:

From the following details relating to Grow More Ltd., prepare Cash Flow Statement:

BALANCE SHEET OF GROW MORE LTD. as at 31st March, 2022

Particulars	Notes No.	31st March, 2022 (`)	31st March, 2021 (`)
ıı EQUITY AND LIABILITIES 1. Shareholders’ Funds (a) Share Capital (b) Reserves and Surplus 2. Non-Current Liabilities Long-term Borrowings: 10% Debentures 3. Current Liabilities (a) Trade Payables (b) Short-term Provisions		20,00,000 6,00,000 4,00,000 14,000,000 2,00,000	16,00,000 4,20,000 ----- 16,40,000 1,40,000
Total		46,00,000	38,00,000
ll. ASSETS 1. Non-Current Assets (a) Fixed Assets (Tangible Assets) (b) Non-current Investments 2. Current Assets (a) Inventories (b) Trade Receivables (c) Cash and Cash Equivalents		26,00,000 2,00,000 8,00,000 10,00,000 -----	18,00,000 --- 4,00,000 14,00,000 2,00,000
Total		46,00,000	38,00,000

Notes to Accounts

Particulars		31st March, 2022 (`)	31st March, 2021 (`)
1.	Share Capital Issued, Subscribed and Paid-up: Equity Shares of ` 100 each fully paid	20,00,000	16,00,000
2.	Reserves and Surplus General Reserve Surplus, i.e., Balance in Statement of Profit and Loss	4,00,000 2,00,000	3, 00,000 1,20,000
		6,00,000	4,20,000
3	Short-term Provisions Provision for Tax	2,00,000	1,40,000
4.	Tangible Assets Plant and Machinery Land and Buildings	14,00,000 12,00,000	10,00,000 8,00,000
		26,000,000	18,00,000

Additional Information:

1. Depreciation @ 25% was charged on the opening value of Plant and Machinery.

2. During the year one old machine costing `1,00,000 (Written Down Value ` 40,000) was sold for ` 70,000.

3. `1,00,000 was paid as income tax during the year.

4. Proposed dividend for the year ended 31st March, 2020 was `4,00,000 and for the year ended 31st March, 2019 was ` 2,00,000.

5. During the current year new debentures were issued on 1st October, 2019.

Answer:

Cash Flow Statement
Particulars	Detail	`
I. Cash flow from operating activities Net profit as per Statement of profit and loss (2,00,000-1,20,000) Add: General Reserve Proposed Dividend Provision for Tax	1,00,000 2,00,000 1,60,000	80,000 4,60,000
Net profit before tax and extraordinary items Add: Depreciation on Machinery Interest on debentures	2,50,000 20,000	5,40,000 , 2,70,000
Less: Gain on Sale of machinery		8,10,000 (30,000)
Operating Profit Before Working Capital Changes Add: Trade Receivable		7,80,000 4,00,000
Less: Trade payable Inventories	2,40,000 4,00,000	11,80,000 6,40,000
Cash Generated from operation		5,40,000
Less: Tax paid		(1,00,000)
Cash flow from operating activities		4,40,000
II. Cash flow from Investing activities Proceeds From sale of Machinery Payments for the purchase of Plant and Machinery Payments for the purchase of Land and Buildings Payments for the purchase of Non-Current Investment		70,000 (6,90,000) (4,00,000) (2,00,000)
Cash Used in Investing activities		(12,20,000)
III. Cash flow from Financing activities Proceeds from Issue of Equity Shares Proceeds from Issue of Debenture Payment of Interest on Debenture Payment of final Dividend		4,00,000 4,00,000 (20,000) (2,00,000)
Cash flow from Financing activities		5,80,000
Net decrease in Cash and cash equivalents Add: Opening Cash and Cash Equivalents		(2,00,000) 2,00,000
Closing Cash and Cash Equivalents		Nil

Working notes:

Dr.	Fixed Assets A/c		Cr.
Particulars	`	Particulars	`
To Balance B/d To P&L a/c (Gain on sale) To Bank a/c (Purchase)	10,00,000 30,000 6,90,000	By Provision for Dep. a/c By Bank a/c (sale) By Balance C/d	250000 70,000 26,00,000
	17,20,000		17,20,000

Space

Dr.	Provision for Tax A/c		Cr.
Particulars	`	Particulars	`
To bank (tax paid) a/c To Balance C/d	1,00,000 2,00,000	By Balance B/d By P&L a/c (tax provided during the year)	1,40,000 1,60,000
	3,00,000		3,00,000

Question 52:

Following is the summarised Balance Sheet of Philips India Ltd. as at 31st March 2022:

Particulars ulars	Note No.	31st March, 2022 (`)	31st March, 2021 (`)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital		13,50,000	13,50,000
(b) Reserves and Surplus	1	11,34,000	10,68,000
2. Non-Current Liabilities
Long-term Borrowings: 10% Mortgage Loan		8,10,000	...
3. Current Liabilities
(a) Trade Payables (Creditors)		4,20,000	5,04,000
(b) Short-term Provisions:
Provision for Tax		30,000	2,25,000
Total Total Expenses		37,26,000	31,47,000
II. ASSETS
1, Non-Current Assets
(a) Fixed Assets (Tangible)		9,60,000	12,00,000
(b) Non-Current Investments		1,80,000	1,50,000
2. Current Assets
(a) Current Investments		21,000	17,000
(b) Inventories		63,30,000	7,82,000
(c) Trade Receivables		13,65,000	6,30,000
(c) Cash and Cash Equivalents		5,70,00	4,30,000
Total		37,26,000	31,47,000

Notes to Accounts

Particulars	31st March, 2022 (`)	31st March, 2021 (`)
I. Reserves and Surplus
General Reserve	9,30,000	9,00,000
Surplus, i.e., Balance in Statement of Profit and Loss	2,04,000	1,68,000
	11,34,000	10,68,000

Additional Information:
1. Investments costing ` 24,000 were sold during the year for ` 25,5000.
2. Provision for Tax made during the year was ` 27,000.
3. During the year, a part of the Fixed Assets costing ` 30,000 was sold for ` 36,000. The rofits were included in the Statement of Profit and Loss.
4. The Interim Dividend paid during the year amounted to ` 1,20,000.
You are required to prepare Cash Flow Statement.

Answer:

Cash Flow Statement for the year ended March 31, 2022
	Particulars	(`)	(`)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss (2,04,000 – 1,68,000)	36,000
	Transfer to General Reserve	30,000
	Interim Dividend	1,20,000
	Provision for Taxation	27,000
	Profit Before Taxation	2,13,000
	Items to be Added:
	Depreciation	2,10,000
	Profit on Sale of Investments	(1,500)
	Profit on Sale of Fixed Assets	(6,000)
	Operating Profit before Working Capital Adjustments	4,15,500
	Less: Increase in Current Assets
	Trade Receivables	(7,35,000)
	Less: Decrease in Current Liabilities
	Trade Payables	(1,02,000)
	Add: Decrease in Current Assets
	Inventories	90,000
	Cash Generated from Operations	(3,31,500)
	Less: Tax Paid	(2,22,000)
	Net Cash from (used in) Operating Activities		(5,53,500)

B	Cash Flow from Investing Activities
	Sale of Investments	25,500
	Sale of Fixed Assets	36,000
	Purchase of Investments	(54,000)
	Net Cash Flow from Investing Activities		7,500

C	Cash Flow from Financing Activities
	Proceeds from Issue of 10% Mortgage Loan	8,10,000
	Interim Dividend Paid	(1,20,000)
	Net Cash Flow from Financing Activities		6,90,000

D	Net Increase in Cash and Cash Equivalents		1,44,000
	Add: Cash and Cash Equivalent in the beginning of the period		4,47,000
	Cash and Cash Equivalents at the end of the period		5,91,000

Working Notes:

WN1

Fixed Assets Account
Dr.		Cr.
Particulars	(`)	Particulars	(`)
Balance b/d	12,00,000	Bank A/c (Sale)	36,000
Profit and Loss A/c (Profit on Sale)	6,000	Depreciation (Bal. Fig.)	2,10,000
		Balance c/d	9,60,000
	12,06,000		12,06,000

WN2

Investments Account
Dr.		Cr.
Particulars	(`)	Particulars	(`)
Balance b/d	1,50,000	Bank A/c (Sale)	25,500
Profit and Loss A/c (Profit on Sale)	1,500	Balance c/d	1,80,000
Bank A/c (Purchases- Bal. Fig.)	54,000
	2,05,500		2,05,500

WN 3

Provision for Taxation Account
Dr.		Cr.
Particulars	(`)	Particulars	(`)
Bank A/c (Tax Paid- Bal. Fig.)	2,22,000	Balance b/d	2,25,000
Balance c/d	30,000	Profit and Loss A/c	27,000
	2,52,000		2,52,000