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12th | Cash Flow Statement | Question No. 53 To 56 | Ts Grewal Solution 2022-2023

Question 53:


Following is the Balance Sheet of Akash Ltd. as at 31st March, 2021. Prepare Cash Flow Statement:

Particulars

 

31st March, 2021 (`)

31st March, 2020 (`)

 

 

 

 

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, 2021 (`)

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, 2021.

(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, 2021

 

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 Mishi Ltd. as at 31st March, 2022, prepare Cash Flow Statement:

 

Particulars ulars

Note No.

31st March, 2022

(`)

31st March, 2021

(`)

I. EQUITY AND LIABILITIES

 

 

 

1. Shareholders' Funds

 

 

 

(a) Share Capital

 

16,00,000

12,00,000

(b) Reserves and Surplus

1

6,60,000

4,40,000

2. Non-Current Liabilities

 

 

 

  Long-term Borrowings (10% Debentures)

 

3,20,000

2,00,000

3. Current Liabilities

 

 

 

(a) Short-term Borrowing (Bank Loan)

 

80,000

1,10,000

(b) Trade Payables

 

1,50,000

1,80,000

Total      

 

28,10,000

21,30,000

II. ASSETS

 

 

 

1. Non-Current Assets

 

 

 

 (a) Fixed Assets−Tangible

2

19,00,000

12,10,000

 (b) Non-Current Investments

 

2,70,000

2,00,000

2. Current Assets

 

 

 

  (a) Current Investments

 

1,60,000

80,000

  (b) Trade Receivables

 

1,80,000

4,00,000

  (c) Cash and Cash Equivalents

3

3,00,000

2,40,000

Total

 

28,10,000

21,30,000

 

 

 

 

  

Notes to Accounts :

Particulars

31st March,

2022

(`)

31st March,

2021

(`)

1. Reserves and Surplus :

 

 

Securities Premium Reserve

20,000

...

General Reserve

3,00,000

2,40,000

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

3,40,000

2,00,000

 

6,60,000

4,40,000

2. Fixed Assets−Tangible

 

 

Machinery (Cost)

21,40,000

14,00,000

Less: Accumulated Depreciation

2,40,000

1,90,000

 

19,00,000

12,10,000

 

 

 

3. Cash and Cash Equivalents

 

 

Cash in Hand

1,40,000

1,10,000

Bank Balance

1,60,000

1,30,000

 

3,00,000

2,40,000

 

 

 

 

Additional Information :
(i) During the year, Machinery costing  ` 1,40,000 (accumulated depreciation provided thereon  ` 1,10,000) was sold for  ` 20,000.
(ii) During the year, Non-current Investments costing  ` 80,000 were sold at a profit of  ` 16,000.

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

1,40,000

 

 

 

General Reserve

60,000

 

 

 

Profit Before Taxation

 

2,00,000

 

 

Items to be Added:

 

 

 

 

Depreciation

1,60,000

 

 

 

Debentures Interest

20,000

 

 

 

Loss on Sale of Fixed Assets

10,000

 

 

 

Items to be Deducted:

 

 

 

 

Profit on sale of Investment

(16,000)

1,74,000

 

 

Operating Profit before Working Capital Adjustments

 

3,74,000

 

 

Less: Decrease in Current Liabilities

 

 

 

 

       Trade Payables

(30,000)

 

 

 

Add: Decrease in Current Assets

 

 

 

 

      Trade Receivables

2,20,000

1,90,000

 

 

Cash Generated from Operations

 

5,64,000

 

 

Less: Tax Paid

 

-

 

 

Net Cash Flows from Operating Activities

 

5,64,000

 

 

 

 

 

 

 

B

Cash Flow from Investing Activities

 

 

 

 

 

Sale of Fixed Assets

20,000

 

 

 

 

Sale of Non-Current Investment

96,000

 

 

 

 

Purchase of Non-Current Investment

(1,50,000)

 

 

 

 

Purchase of Fixed Assets

(8,80,000)

 

 

 

Net Cash Used in Investing Activities

 

(9,14,000)

 

 

 

 

 

 

C

Cash Flow from Financing Activities

 

 

 

 

 Proceeds from Issue of Share Capital

     4,00,000

 

 

 

Proceeds from Issue of issue of Debentures

1,20,000

 

 

 

Security Premium Reserve

20,000

 

 

 

Repayment of Bank Loan

(30,000)

 

 

 

Interest Paid

(20,000)

 

 

 

Net Cash Flow from Financing Activities

 

4,90,000

 

 

 

 

 

 

 

D

Net Increase Decrease in Cash and Cash Equivalents

 

1,40,000

 

 

 

Add: Cash and Cash Equivalent in the beginning of the period (1,10,000+1,30,000+80,000)

 

3,20,000

 

 

Cash and Cash Equivalents at the end of the period (1,40,000+1,60,000+1,60,000)

 

4,60,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Working Notes:

WN1:

 

 

Fixed Assets Account

 

 

Dr.

Cr.

 

 

Particulars

Amount

(`)

Particulars

Amount

(`)

 

 

Balance b/d

14,00,000

Bank A/c (Sale)

20,000

 

 

Bank A/c (Purchase- Bal. Fig.)

8,80,000

Accumulated Depreciation

1,10,000

 

 

 

 

Profit and Loss A/c (Loss on Sale)

10,000

 

 

 

 

Balance c/d

21,40,000

 

 

 

22,80,000

 

22,80,000

 

 

WN2:

Accumulated Depreciation Account

 

 

Dr.

Cr.

 

 

Particulars

Amount

(`)

Particulars

Amount

(`)

 

 

Fixed Assets A/c

1,10,000

Balance b/d

1,90,000

 

 

Balance c/d

2,40,000

Profit and Loss A/c (Dep. charged during the year- Bal. Fig.)

1,60,000

 

 

 

3,50,000

 

3,50,000

 

 

 

 

 

 

 

 

WN3:

Non-Current Investment Account

 

Dr.

Cr.

 

Particulars

Amount

(`)

Particulars

Amount

(`)

 

Balance b/d

2,00,000

Bank A/c (Sale) (80,000+16,000)

96,000

 

Profit and Loss A/c (Profit on Sale)

16,000

Balance c/d

2,70,000

 

Bank A/c (Purchase- Bal. Fig.)

1,50,000

 

 

 

 

 

 

 

 

 

3,66,000

 

3,66,000

 

 

 

 

 

 

Question 55:


From the following Balance Sheet of Samta Ltd., as at 31st March, 2019, prepare Cash Flow Statement:

 

Particulars ulars

Note No.

31st March, 2019

(`)

31st March,
2018

(`)

I. EQUITY AND LIABILITIES

 

 

 

1. Shareholders' Funds

 

 

 

(a) Share Capital

1

7,50,000

7,50,000

(b) Reserves and Surplus

2

3,10,000

(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

 

15,30,000

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

 

1,30,000

25,000

Total

 

15,30,000

10,80,000

 

 

 

 

Notes to Accounts

Particulars

31st March, 2019

(`)

31st March, 2018

(`)

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

...

    General Reserve

1,50,000

1,20,000

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

1,50,000

(1,40,000)

 

3,10,000

(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, 2018 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, 2019

 

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

 

 

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

 

(35,000)

 

Net Cash Flows from Operating Activities

 

3,75,000

 

 

 

 

 

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

 

95,000

 

 

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)

 

1,35,000

 

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 56:


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

Particulars ulars

Note No.

31st March, 2022

(`)

31st March, 2021

(`)

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,

2022

(`)

31st March,

2021

(`)

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, 2022

31st March, 2021

 

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, 2021;
(v) Investments were purchased on 31st March, 2022;
(vi) Preference shares were redeemed on 31st December,2021;
(vii) An interim dividend @ 15% was paid on equity shares on 31st December, 2021;
(viii) Fresh equity shares were issued at a premium of 5% on 31st March, 2022.

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

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 31st December, 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

 

 

 

 

 

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