12th | Cash Flow Statement | Question No. 13 To 16 | Ts Grewal Solution 2023-2024

Question 13:

Compute Cash Flow from Operating Activities from the following information:


Particulars	`
Net Profit after Provision for Tax and Payment of Dividend	2,15,000
Provision for Tax	45,000
Final Dividend paid during the year	50,000
Depreciation	25,000
Loss on Sale of Machinery	10,000
Patents Amortised	30,000
Gain on Sale of Land	70,000
Income Tax Refund	30,000

Answer:

Cash Flow from Operating Activities
	Particulars	Amount (`)	Amount (`)
	Net Profit after Provision for Tax and Proposed Dividend		2,15,000
	Add: Provision for Tax		45,000
	Add: Proposed Dividend		50,000
	Profit Before Taxation		3,10,000
	Items to be Added:
	Depreciation	25,000
	Loss on Sale of Machinery	10,000
	Patents Amortised	30,000	65,000
			3,75,000
	Items to be Deducted:
	Income Tax Refund	(30,000)
	Gain on Sale of Land	(70,000)	(1,00,000)
	Operating Profit before Working Capital Changes		2,75,000
	Less: Net Tax Paid (45,000 – 30,000)		(15,000)
	Net Cash Flows from Operating Activities		2,60,000

Question 14:

Calculate Cash Flow from Operating Activities from the following:

(i) Profit form the year is ` 7,00,000 after considering the following items:


Particulars	(`)
Depreciation on Fixed Assets	40,000
Goodwill Amortised	20,000
Gain on Sale of Land	90,000
Appropriation of Profit towards General Reserve	60,000

(ii) Following is the position of Current Assets and Current Liabilities


Particulars	Closing Balance (`)	Opening Balance (`)
Trade Payables	50,000	75,000
Trade Receivables	75,000	60,000
Prepaid Expenses	10,000	18,000

Answer:

Cash Flow from Operating Activities
	Particulars	(`)	(`)
	Profit as per Statement of Profit and Loss		7,00,000
	Add: transfer to General Reserve		60,000
	Profit Before Tax and Extraordinary items		7,60,000
	Items to be Added:
	Depreciation on Fixed Assets	40,000
	Goodwill amortised	20,000	60,000
			8,20,000
	Items to be Deducted:
	Profit on Sale of Land		(90,000)
	Operating Profit before Working Capital Adjustments		7,30,000
	Add: Prepaid Expenses		8,000
			7,38,000
	Less: Trade payable	(25,000)
	Less: Trade receivable	(15,000)	(40,000)
	Net Cash Flows from Operating Activities		6,98,000

Note: There is a misprint in the answer given in the textbook. The correct amount for 'Net Cash Flows from Operating Activities' should be ` 10,20,000 (as calculated above).

Question 15:

Charles Ltd. earned a profit of ` 1,00,000 after charging depreciation of 20,000 on assets and a transfer to General Reserve of ` 30,000. Goodwill amortised was ` 7,000, and gain on sale of machinery was ` 3,000. Other information available is (changes in the value of Current Assets and Current Liabilities): trade receivables showed an increase of ` 3,000; trade payables an increase of ` 6,000; Prepaid expenses an increase of ` 200; and outstanding expenses a decrease of ` 2,000.
Ascertain Cash Flow from Operating Activities.

Answer:

Cash Flow Statement
	Particulars		(`)	(`)
	Cash Flow from Operating Activities
	Profit as per Statement of Profit and Loss			1,00,000
	Items to be Added:
	Transfer to General Reserve			30,000
	Net profit Before tax			1,30,000
	Items to be Added:
	Depreciation		20,000
	Goodwill amortised		7,000
			30,000
	Items to be Deducted:
	Gain on sale of machinery		(3,000)	54,000
	Operating Profit before Working Capital Adjustments			1,54,000
	Less: Increase in Current Assets
		Prepaid Expenses	(200)
		Trade Receivables	(3,000)
	Less: Decrease in Current Liabilities
	Outstanding Expenses		(2,000)
	Add: Increase in Current Liabilities
	Trade Payables		6,000	800
	Cash Generated from Operations			1,54,800

Question 16: From the following information, calculate Cash Flow from Operating Activities:

Particulars	31st March, 2022 (Rs.)	31st March, 2023 (Rs.)
Equity Share Capital	20,00,000	30,00,000
10% Preference Share Capital	2,00,000	1,00,000
Securities Premium	-	95,000
Surplus, i.e., Balance in Statement of Profit & Loss	4,00,000	8,00,000
10% Debentures	10,00,000	10,00,000

Additional Information:

(i) Preference shares were redeemed on 31st March, 2023 at a premium of 5%.

(ii) Dividend on equity shares was paid @ 8%.

(iii) Fresh issue of equity shares was made on 1st April 2022.

[Ans.: Cash Flow from Operating Activities =7,60,000.]

Answer:

Particulars	Rs.
Surplus, i.e., Balance in Statement of Profit & Loss (4,00,000-8,00,000)	4,00,000
Add: Dividend on equity shares was paid @ 8% of 30,00,000	2,40,000
Dividend on 10% Preference Share Capital was paid (10% of 2,00,000)
Profit before Tax and extraordinary items	6,60,000
Less: Interest on 10% Debentures of (10% of 10,00,000)	1,00,000
Cash Flow from Operating Activities	7,60,000