12th | Cash Flow Statement | Question No. 53 To 56 | Ts Grewal Solution 2023-2024

Question 53:

Following is the Balance Sheet of Akash Ltd. as at 31st March, 2023. Prepare Cash Flow Statement:

Particulars		31st March, 2023 (`)	31st March, 2022 (`)

I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital		30,00,000	20,00,000
(b) Reserves and Surplus	1	(4,25,000)	(5,37,500)
2. Non-Current Liabilities
Long-term Borrowings	2	7,50,000	6,25,000
3. Current Liabilities
Trade Payables		4,75,000	6,75,000
Total		38,00,000	27,62,500

II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment (Fixed Assets):
-Tangible Assets (Machinery)		17,25,000	12,50,000
(b) Non-current Investments		3,00,000	5,00,000
2. Current Assets
(a) Inventories		10,00,000	7,50,000
(b) Trade Receivables		6,00,000	1,12,500
(c) Cash and Cash Equivalents		1,75,000	1,50,000
Total		38,00,000	27,62,500

Notes to Accounts

Particulars	31st March, 2022 (`)	31st March, 2020 (`)
1. Reserves and Surplus
Surplus, i.e, Balance in Statement of Profit and Loss	(4,25,000)	(5,37,500)
2. Long-term Borrowings
12% Debentures	7,50,000	6,25,000

Additional Information:

(i) Debentures were issued on 1st January, 2023.

(i) Machinery costing ` 5,00,000 on which depreciation charged was ` 1,75,000 was sold for ` 3,75,000.

(ii) Depreciation charged during the year amounted to ` 2,00,000.

(iv) Non-current Investments were sold at a profit of 20%.

Prepare Cash Flow Statement.

Answer:

Akash Ltd. Cash Flow Statement as at 31st March, 2023
	Particulars	Detail	(`)
I.	Cash Flow From operating Activity
	Surplus, i.e, Balance in Statement of Profit and Loss		(1,12,500)
Add:	Depreciation on Machinery	2,00,000
	Interest on Debenture	78,750	2,78,750
			3,91,250
Less:	Profit on sale of Machinery	(50,000)
	Profit on sale of Non-Current Investment	(40,000)	(90,000)
	Operating Profit before working capital changes		3,01,250

Less:	Increase in Assets and Decrease in Liabilities
	Decrease in Trade Payable	(2,00,000)
	Increase in inventories	(2,50,000)
	Increase in Trade Receivables	(4,87,500)	(9,37,500)
	Cash Used in operating Activity		(6,36,250)

II.	Cash Flow From Investing Activity
	Proceeds from Sale of Machinery	2,40,000
	Proceeds from Sale of Non-Current Investment	3,75,000	6,15,000
	Payment for purchase of Machinery		(10,00,000)
	Cash used in Investing Activity		(3,85,000)

III.	Cash Flow From Financing Activity
	Issue of Shares	10,00,000
	Issue of Debentures	1,25,000	11,25,000
	Payment of Interest on debentures		(78,750)
	Cash Flow From Financing Activity		10,46,250
	Net increase in in cash and cash equivalent		25,000
Add:	Opening Cash and Cash Equivalents		1,50,000
	closing Cash and Cash Equivalents		1,75,000

Working Notes:

Dr.	Machinery A/c		Cr.
Particulars	`	Particulars	`
To Balance B/d	12,50,000	By Bank A/c (Sale)	3,75,000
To P&L a/c (Profit on sale)	50,000	By P&L a/c (Depreciation provided during the year)	2,00,000
To Bank a/c (Purchase)	10,00,000	By Balance C/d	17,25,000
	23,00,000		23,00,000

Question 54:

From the following Balance Sheet of Samta Ltd., as at 31st March, 2023, prepare Cash Flow Statement:

Particulars ulars	Note No.	31st March, 2023 (`)	31st March, 2022 (`)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital	1	7,50,000	7,50,000
(b) Reserves and Surplus	2	3,05,000	(20,000)
2. Non-Current Liabilities
Long-term Borrowings (8% Debentures)		2,60,000	1,50,000
3. Current Liabilities
(a) Short-term Borrowings (8% Bank Loan)		40,000	50,000
(b) Trade Payables		1,20,000	1,10,000
(c) Short-term Provisions	3	50,000	40,000
Total Total Expenses		15,25,000	10,80,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets:
(i) Tangible Assets (Net)		8,60,000	6,20,000
(ii) Intangible Assets (Goodwill)		15,000	40,000
(b) Non-Current Investments		1,25,000	80,000
2. Current Assets
(a) Current Investments		5,000	15,000
(b) Inventories		1,95,000	1,00,000
(c) Trade Receivables		2,00,000	2,00,000
(d) Cash and Cash Equivalents		1,25,000	25,000
Total		15,25,000	10,80,000

Notes to Accounts

Particulars		31st March, 2023 (`)	31st March, 2022 (`)
1. Share Capital
Equity Share Capital		5,50,000	4,50,000
12% Preference Share Capital		2,00,000	3,00,000
		7,50,000	7,50,000
2. Reserves and Surplus
Securities Premium Reserve	10,000		...
Less: Premium on redemption on pref. shares	5,000	5,000
General Reserve		1,50,000	1,20,000
Surplus, i.e., Balance in Statement of Profit and Loss		1,50,000	(1,40,000)
		3,05,000	(20,000)
4. Short-term Provisions
Provision for Tax		50,000	40,000

Additional Information :
(i) During the year a piece of machinery costing ` 60,000 on which depreciation charged was ` 20,000 was sold at 50% of its book value. Depreciation provided on tangible Assets ` 60,000;
(ii) Income tax ` 45,000 was provided;
(iii) Additional Debentures were issued at par on 1st October, 2022 and Bank Loan was repaid on the same date;
(iv) At the end of the year Preference Shares were redeemed at a premium of 5%.

Answer:

		Cash Flow Statement for the year ended March 31, 2022
	Particulars			Amount (`)	Amount (`)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss [1,50,000 − (−1,40,000)]				2,90,000
	Provision for Tax			45,000
	General Reserve			30,000	75,000
	Profit Before Taxation				3,65,000
	Items to be Added:
	Depreciation on Fixed Assets			60,000
	Loss on Fixed Assets			20,000
	Interest on Debentures (6,000 + 10,400)			16,400
	Interest on Bank Loan (2,000 + 1,600)			3,600
	Premium on Redemption of Preference Shares			5,000
	Goodwill written off			25,000	1,30,000
	Operating Profit before Working Capital Adjustments				4,95,000
	Less: Increase in Current Assets
			Inventories	(95,000)
	Add: Increase in Current Liabilities
	Trade Payables			10,000	(85,000)
	Cash Generated from Operations				4,10,000
	Less: Tax Paid				(40,000)
	Net Cash Flows from Operating Activities				3,70,000

B	Cash Flow from Investing Activities
			Sale of Fixed Assets	20,000
			Purchase of Fixed Assets	(3,40,000)
			Purchase of Investment	(45,000)
	Net Cash Used in Investing Activities				(3,65,000)

C	Cash Flow from Financing Activities
	Proceeds from Issue of Share Capital			1,00,000
	Proceeds from Issue of Debentures			1,10,000
	Interest on Debentures Paid			(16,400)
	Redemption of Preference Share Capital			(1,00,000)
	Premium on Redemption of Preference Share Capital			(5,000)
	Security Premium Reserve			10,000
	Repayment of Bank Loan			(10,000)
	Interest on Bank Loan Paid			(3,600)
	Net Cash Flow from Financing Activities				85,000
D	Net Increase in Cash and Cash Equivalents				90,000
			Add: Cash and Cash Equivalent in the beginning of the period (25,000+15,000)		40,000
	Cash and Cash Equivalents at the end of the period (1,30,000+5,000)				1,30,000

Working Notes:

WN1:

Fixed Assets Account
Dr.		Cr.
Particulars	Amount (`)	Particulars	Amount (`)
Balance b/d	6,20,000	Bank A/c (Sale) (40,000×50%)	20,000
Bank A/c (Purchase- Bal. Fig.)	3,40,000	Depreciation	60,000
		Profit and Loss A/c (Loss on Sale)	20,000
		Balance c/d	8,60,000
	9,60,000		9,60,000

WN2:

Provision for Taxation Account
Dr.		Cr.
Particulars	Amount (`)	Particulars	Amount (`)
Bank A/c (Tax Paid) (Bal. Fig.)	35,000	Balance b/d	40,000
Balance c/d	50,000	Profit and Loss A/c	45,000
	85,000		85,000

Question 55:

From the following Balance Sheet and information of Sun Ltd., prepare Cash Flow Statement:

Particulars ulars	Note No.	31st March, 2023 (`)	31st March, 2022 (`)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital	1	7,00,000	6,00,000
(b) Reserves and Surplus	2	4,10,000	2,00,000
2. Non-Current Liabilities
Long-term Borrowings: 10% Debentures		3,00,000	2,00,000
3. Current Liabilities
(a) Trade Payables		1,40,000	60,000
Total Total Expenses		15,50,000	10,60,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets−Tangible		7,00,000	6,00,000
(b) 10% Investments		2,00,000	1,00,000
2. Current Assets
(a) Current Investments		90,000	50,000
(b) Inventories		2,00,000	1,00,000
(c) Trade Receivables	3	2,80,000	1,90,000
(d) Cash and Cash Equivalents		80,000	20,000
Total		15,50,000	10,60,000

Notes to Accounts :
Particulars	31st March, 2023 (`)	31st March, 2022 (`)
1. Share Capital
Equity Share Capital	5,00,000	3,00,000
10% Preference Share Capital	2,00,000	3,00,000
	7,00,000	6,00,000
2. Reserves and Surplus
Securities Premium Reserve	10,000	...
Surplus i.e., Balance in Statement of Profit and Loss	4,00,000	2,00,000
	4,10,000	2,00,000
3. Trade Receivables
Sundry Debtors	3,00,000	2,00,000
Less: Provision for Doubtful Debts	20,000	10,000
	2,80,000	1,90,000

You are informed that during the year:

(i)	Proposed Dividend:	31st March, 2023	31st March, 2022
	Equity Share Capital	Nil	Nil
	Preference Share Capital	10%	10%

(ii) A machine with a book value of ` 90,000 was sold for ` 50,000;
(iii) Depreciation charged during the year ` 60,000;
(iv) Debentures were issued on 1st April, 2022;
(v) Investments were purchased on 31st March, 2023;
(vi) Preference shares were redeemed on 31st December,2022;
(vii) An interim dividend @ 15% was paid on equity shares on 31st December, 2022;
(viii) Fresh equity shares were issued at a premium of 5% on 31st March, 2023.

Answer:

		Cash Flow Statement for the year ended March 31, 2023
	Particulars			Amount (`)	Amount (`)
A	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss			2,00,000
	Preference Dividend (3,00,000×10100)W.N.-1			30,000
	Profit Before Taxation				2,30,000
	Items to be Added:
	Depreciation on Fixed Assets			60,000
	Loss on Fixed Assets			40,000
	Interest on Debentures			30,000
	Dividend on Equity Shares			45,000
	Provision for Doubtful Debts			10,000
	Items to be Deducted:
	Interest on Investment			(10,000)	1,75,000
	Operating Profit before Working Capital Adjustments				4,05,000
	Less: Increase in Current Assets
			Trade Receivables	(1,00,000)
			Inventories	(1,00,000)	(2,00,000)
	Add: Increase in Current Liabilities
	Trade Payables			80,000	80,000
	Cash Generated from Operations				2,85,000
	Less: Tax Paid				-
	Net Cash Flows from Operating Activities				2,85,000

B	Cash Flow from Investing Activities
			Sale of Fixed Assets	50,000
			Purchase of Fixed Assets	(2,50,000)
			Purchase of Investment	(1,00,000)
			Interest on Investment	10,000
	Net Cash Used in Investing Activities				(2,90,000)

C	Cash Flow from Financing Activities
	Proceeds from Issue of Share Capital			2,00,000
	Proceeds from Issue of Debentures			1,00,000
	Interest on Debentures Paid			(30,000)
	Redemption of Preference Share Capital			(1,00,000)
	Security Premium Reserve			10,000
	Dividend Paid on Preference Share Capital			(30,000)
	Dividend Paid on Equity Share Capital			(45,000)
	Net Cash Flow from Financing Activities				1,05,000

D	Net Increase in Cash and Cash Equivalents				1,00,000
			Add: Cash and Cash Equivalent in the beginning of the period (50,000+20,000)		70,000
	Cash and Cash Equivalents at the end of the period (90,000+80,000)				1,70,000

Working Notes:

(1) Dividend on 10% Preference Shares has been calculated on the value as on 31st March, 2018 as `. 1,00,000 Preference Shares were redeemed on 31stDecember, 2018.

(2)

Fixed Assets Account
Dr.		Cr.
Particulars	Amount (`)	Particulars	Amount (`)
Balance b/d	6,00,000	Bank A/c (Sale)	50,000
Bank A/c (Purchase- Bal. Fig.)	2,50,000	Depreciation	60,000
		Profit and Loss A/c (Loss on Sale)	40,000
		Balance c/d	7,00,000
	8,50,000		8,50,000