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Question
Following is the Balance Sheet of Bharat Gas Ltd. as at 31.3.2023:
Balance Sheet of Bharat Gas Ltd. as at 31.3.2023
| Particulars | Note No. | 31.3.2023 (₹) | 31.3.2022 (₹) |
| I. Equity and Liabilities: | |||
| 1. Shareholders’ funds | |||
| (a) Share capital | 14,00,000 | 10,00,000 | |
| (b) Reserves and Surplus | 1 | 5,00,000 | 4,00,000 |
| 2. Non-current Liabilities | |||
| Long term borrowings | 5,00,000 | 1,40,000 | |
| 3. Current liabilities | |||
| (a) Trade payables | 1,00,000 | 60,000 | |
| (b) Short term provisions | 2 | 80,000 | 60,000 |
| Total | 25,80,000 | 16,60,000 | |
| II. Assets: | |||
| 1. Non-current Assets | |||
| (a) Fixed Assets (Property, plant and equipment and intangible assets) |
|||
| (i) Tangible assets (Property, plant and equipment) |
3 | 16,00,000 | 9,00,000 |
| (ii) Intangible assets | 4 | 1,40,000 | 2,00,000 |
| 2. Current Assets | |||
| (a) Inventories | 2,50,000 | 2,00,000 | |
| (b) Trade receivables | 5,00,000 | 3,00,000 | |
| (c) Cash and cash equivalents | 90,000 | 60,000 | |
| Total | 25,80,000 | 16,60,000 |
Notes to Accounts:
| Note No. | Particulars | 31.3.2023 (₹) | 31.3.2022 (₹) |
| 1. | Reserves and Surplus: | ||
| Balance in Statement of Profit and Loss | 5,00,000 | 4,00,000 | |
| 5,00,000 | 4,00,000 | ||
| 2. | Short term provisions: | ||
| Provision for Taxation | 80,000 | 60,000 | |
| 80,000 | 60,000 | ||
| 3. | Tangible Assets: (Property, Plant & Equipment) Machinery) |
18,50,000 | 10,00,000 |
| Less: Accumulated Depreciation | (2,50,000) | (1,00,000) | |
| 16,00,000 | 9,00,000 | ||
| 4. | Intangible Assets: | ||
| Goodwill | 1,40,000 | 2,00,000 | |
| 1,40,000 | 2,00,000 |
Adjustments: During the year a machine costing ₹ 3,00,000 on which accumulated depreciation was ₹ 45,000 was sold for ₹ 1,35,000.
Calculate 'Cash flows from Operating Activities'.
Ledger
Solution
| Particulars | Amount (₹) | Amount (₹) |
| A. Cash Flow from Operating Activities | ||
| Net Profit before Tax (1,00,000 + 80,000) | 1,80,000 | |
| Adjustment of non-cash & non-operating items: | ||
| Add: | ||
| Depreciation for the year (WN 1) | 1,95,000 | |
| Loss on sale of machine (WN 2) | 1,20,000 | |
| Amortization of goodwill | 60,000 | |
| Operating Profit Before Working Capital Changes | 5,55,000 | |
| Less: | ||
| Increase in current assets | ||
| Inventories | (50,000) | |
| Trade Receivables | (2,00,000) | |
| Add: Increase in current liability | ||
| Trade payables | 40,000 | |
| Cash generated from operations | 3,45,000 | |
| Less: Taxpaid | 60,000 | |
| Cash Flow from Operating Activities | 2,85,000 |
WN 1
| Dr. | Accumulated Depreciation A/c | Cr. | |
| Particulars | Amount (₹) | Particulars | Amount (₹) |
| To Machinery A/c | 45,000 | By Balance B/d | 1,00,000 |
| To Balance c/d | 2,50,000 | By Statement of Profit and Loss | 1,95,000 |
| 2,95,000 | 2,95,000 | ||
WN 2
Loss on sale of machine
Current value of machine = 3,00,000 − 45,000 = 2,55,000
Loss = 2,55,000 − 1,35,000 = 1,20,000
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