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Question
From the following Balance Sheets of Sonam Ltd as on 31-3-2012 and 31-3-2011.
Prepare a Cash Flow Statements:
|
Liabilities |
31-3-2011 Rs |
31-3-2011 Rs |
Assets |
31-3-2011 Rs |
31-3-2011 Rs |
|
Equity Shares Capital Profit and Loss Account Bank Loan Proposed Dividend Provision for tax Creditors |
1,00,000
25,000
50,000 20,000
10,000 15,000
|
1,50,000
50,000
25,000 15,000
17,500 11,250 |
Patents Building Investment Debtors Stock Cash
|
12,500 1,50,000 - 50,000 2,500 5,000 |
11,250 1,50,000 18,750 3,750 21,250 |
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2,20,000 |
2,68,750 |
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2,20,000 |
2,68,750 |
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Additional Information:
During the year a Building having book value Rs 50,000 was sold at a loss of Rs 2,000 and deprecation charged on Building was Rs 4,000
Solution
Cash Flow Statement Activities
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Particulars |
Amount Rs |
Amount Rs |
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Cash Flow from Operating Activities |
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Profit during the year |
25,000 |
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Proposed Dividend |
15,000 |
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Provision for Taxation |
17,500 |
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Profit before Taxation |
57,500 |
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Items to be adjusted: |
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Add: |
Depreciation |
4,000 |
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Add: |
Loss on Sale of Assets |
2,000 |
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Add: |
Patents Written-off |
1,250 |
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Operating Profit before Working Capital Changes |
64,750 |
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Less: |
Increase in Debtors |
(13,750) |
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Less: |
Increase in Stock |
(1,250) |
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Less: |
Decrease in Creditors |
(3,750) |
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Profit from operation before Tax paid |
46,000 |
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Less: |
Tax paid |
10,000 |
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Cash from Operating Activities |
36,000 |
36,000 |
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Cash Flow from Investing Activities |
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Proceeds from Sale of Building |
48,000 |
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Less: |
Purchase of Building |
(54,000) |
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Less: |
Purchase of Investment |
(18,750) |
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Cash used in Investing Activities |
(24,750) |
(24,750) |
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Cash Flow from Financing Activities |
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Proceeds from Issue of Share |
50,000 |
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Less: |
Repayment of loan |
(25,000) |
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Less: |
Dividend Paid |
(20,000) |
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Cash from Financing Activities |
5,000 |
5,000 |
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Net Increase in Cash and Cash Equivalents |
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16,250 |
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Add: |
Cash at the beginning |
|
5,000 |
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Cash at the end |
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21,250 |
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Notes
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Building Account |
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Dr. |
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Cr. |
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Date |
Particulars |
Amount Rs |
Date |
Particulars |
Amount Rs |
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Balance b/d |
1,50,000 |
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Depreciations |
4,000 |
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Sale |
48,000 |
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Loss on Sale |
2,000 |
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Bank A/c (Purchase- Balancing figure) |
54,000 |
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Balance c/d |
1,50,000 |
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2,04,000 |
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2,04,000 |
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APPEARS IN
RELATED QUESTIONS
State the objective of preparing ‘Cash Flow statement’.
Does movement between items that constitute cash or cash equivalents result into cash flow? Give reason in support of your answer.
Which of the following transactions will result in 'Flow of Cash’?
(a) Deposited Rs 10,000 into the bank.
(b) Withdrew cash from bank Rs 14,500.
(c) Sale of the machinery of the book value of Rs 74,000 at a loss of Rs 9,000.
(d) Converted Rs 2,00,000 9% debentures into equity shares.
While preparing Cash Flow Statement, the accountant of a financing company showed 'Dividend Received Rs 50,000 on investments' as an investing activity. Was he correct in doing so? Give reason.
Which of the following transactions will result in the flow of cash?
(1) Deposited Rs 40,000 into the bank.
(2) Withdrew cash from bank Rs 54,000.
(3) Sold marketable securities of Rs 25,000 at par.
(4) The sold machinery of the book value of Rs 50,000 at a gain of Rs 10,000
Short term investments are not considered while preparing cash flow statement. Why?
State the purpose of preparing a ‘Cash Flow Statement’.
From the following Balance Sheet of Vijay Ltd. as on 31-3-2009 and 31-3-2010 prepare a Cash Flow Statement.
|
Liabilities |
31-3-2009 Rs |
31-3-2010 Rs |
Assets |
31-3-2009 Rs |
31-3-2010 Rs |
|
Share Capital |
45,000 |
65,000 |
Fixed Assets |
46,700 |
83,000 |
|
General Reserve |
15,000 |
27,500 |
Stock |
11,000 |
13,000 |
|
Profit and Loss Account |
10,000 |
15,000 |
Debtors |
18,000 |
19,500 |
|
Trade Creditors |
8,700 |
11,000 |
Cash |
2,000 |
2,500 |
|
|
|
|
Preliminary Expenses |
1,000 |
500 |
|
|
78,700 |
1,18,500 |
|
78,700 |
1,18,500 |
|
|
|
|
|
|
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Additional Information:
(i) Depreciation on Fixed assets for the year 2009-2010 was Rs 14,700
(ii) An interim dividend Rs 7,000 has been paid to the shareholders during the year.
List any two investing activities which result into outflow of cash.
You are required to prepare a Cash-Flow Statement (as per AS-3)
for the year 2016-17 from the following Balance Sheet.
Balance Sheet of Honesty Ltd.
As at 31st March, 2016 and 31st March, 2017
| I | Particulars | Note No. | 31.03.2017 |
31.03.2017 |
| 1. |
EQUITY AND LIABILITIES |
1. |
14,00,000 5,00,000
|
10,00,000 4,00,000
|
| 2. | Non-Current Liabilities Long Term Borrowing (10% Debentures) |
5,00,000 | 1,40,000 | |
| 3. | Current Liabilities (a) Short Term Borrowings (Bank Overdraft) (b) Trade Payables (Creditors) (c) Short Term Provisions |
20,000 1,00,000 60,000 |
30,000 60,000 30,000 |
|
| TOTAL | 25,80,000 | 16,60,000 | ||
| II 1. | ASSETS Non-Current Assets Fixed Assets (i) Tangible (ii) Intangible (Goodwill) |
2. |
16,00,000 1,40,000 |
9,00,000 2,00,000 |
| 2. | Current Assets (a) Inventories (b) Trade Receivables (c) Cash and Bank Balances (Cash at Bank) |
2,50,000 5,00,000 90,000 |
2,00,000 3,00,000 60,000 |
|
| TOTAL | 25,80,000 | 16,60,000 |
Notes to Accounts:
| Particulars | 31.03.2017 | 31.03.2016 |
| 1. Short term provisions provision for taxation |
60,000 | 30,000 |
| 2. Fixed Assets (Tangible) Plant and Machinery Less Accumulated Depreciation |
17,60,000 (1,60,000) |
10,00,000 (1,00,000) |
| 16,00,000 | 9,00,000 |
During the year 2016-17:
(i) A part of the machine, costing Rs. 50,000, accumulated depreciation thereon being Rs. 20,000, was sold for
Rs.18,000.
(ii) Tax paid Rs. 20,000.
(iii) Interest of Rs. 50,000 paid on Debentures.
Compute cash from operations from the following figures:
(i) Profit for the year 2016-17 is a sum of Rs. 10,000 after providing for depreciation of Rs. 2,000.
(ii) The current assets and current liabilities of the business for the year ended March 31, 2016 and 2015 are as follows:
| Particular | March 31, 2016 (Rs) |
March 31, 2017 (Rs) |
| Trade Receivables | 14,000 | 15,000 |
| Provision for Doubtful Debts | 1,000 | 1,200 |
| Trade Payables | 13,000 | 15,000 |
| Inventories | 5,000 | 8,000 |
| Other Current Assets | 10,000 | 12,000 |
| Expenses payable | 1,000 | 1,500 |
| Prepaid Expenses | 2,000 | 1,000 |
| Accrued Income | 3,000 | 4,000 |
| Income received in advance | 2,000 | 1,000 |
Answer the following question:
State giving reason, whether the issue of shares for consideration other than cash will result into inflow, outflow or no flow of cash.
What is meant by 'Cash Flows' ?
Name the activities that is related to purchase and sale of long-term assets or fixed assets such as machinery, furniture, land and building, etc.?
Which one is Cash Outflows from investing activities?
From the following information, calculate cash flows from financing activities:
Long-term Loans Rs. 2,09,000 Rs. 2,50,000
During the year, the company repaid a loan of Rs. 1,00,000.
Cash Flow Statement is based upon ______.
Statement of cash flows includes:
______ reconciles the opening cash balance with the closing cash balance of a given period on the basis of a net decrease or increase in cash during that period.
