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Question
From the following Balance Sheet of Jay Ltd. as at 31.3.2022, calculate 'Cash Flow from Operating Activities':
| Jay Ltd. Balance Sheet as at 31.3.2022 |
|||
| Particulars | Note No. | 31.3.2022 (₹) | 31.3.2021 (₹) |
| I. Equity and Liabilities | |||
| 1. Shareholders' Funds | |||
| (a) Share Capital | 1 | 50,00,000 | 30,00,000 |
| (b) Reserves and Surplus | 2 | 10,00,000 | 6,00,000 |
| 2. Non-Current Liabilities | |||
| Long-term borrowings | 3 | 8,00,000 | 4,00,000 |
| 3. Current Liabilities | |||
| (a) Trade Payables | 2,00,000 | 3,00,000 | |
| (b) Other Current Liabilities | 4 | 3,00,000 | 1,00,000 |
| (c) Short-term provisions | 5 | 1,50,000 | 1,00,000 |
| Total | 74,50,000 | 45,00,000 | |
| II. Assets | |||
| 1. Non Current Assets | |||
| Fixed Assets | |||
| (i) Tangible Assets | 6 | 60,00,000 | 40,00,000 |
| (ii) Intangible Assets | 7 | 4,00,000 | 4,00,000 |
| 2. Current Assets | |||
| (a) Inventories | 7,00,000 | 40,000 | |
| (b) Cash and Cash equivalents | 3,50,000 | 60,000 | |
| Total | 74,50,000 | 45,00,000 | |
Note to Accounts:
| Note No. | Particulars | 31st march, 2022 (₹) | 31st march, 2021 (₹) |
| 1. | Share Capital: | ||
| Equity Share Capital | 50,00,000 | 30,00,000 | |
| 2. | Reserves and Surplus: | ||
| Surplus i.e. balance in the Statement of Profit and Loss |
10,00,000 | 6,00,000 | |
| 3. | Long-term borrowings: | ||
| 10% debentures | 8,00,000 | 4,00,000 | |
| 4. | Other Current Liabilities: | ||
| Outstanding rent | 3,00,000 | 1,00,000 | |
| 5. | Short-term provisions: | ||
| Provision for tax | 1,50,000 | 1,00,000 | |
| 6. | Tangible Assets: | ||
| Land | 60,00,000 | 40,00,000 | |
| 7. | Intangible Assets: | ||
| Patents | 4,00,000 | 4,00,000 |
Additional Information:
₹ 4,00,000, 10% Debentures were issued on 31.3.2022.
Solution
| In the books of Jay Ltd. Cash flow from Operating Activities |
||
| Particulars | Amount (₹) | |
| Net Profit before Tax (Note No. 1) | 5,50,000 | |
| Adjustment of non-cash and non-operating items: | ||
| Interest on debentures | 40,000 | |
| Operating profit before working capital changes | 5,90,000 | |
| Add: Decrease in current assets/increase in current liabilities | ||
| Outstanding expenses | 2,00,000 | |
| 7,90,000 | ||
| Less: Increase in current assets/decrease in current liabilities | ||
| Inventories | 6,60,000 | (7,60,000) |
| Trade payables | 1,00,000 | |
| 30,000 | ||
| Less: Income tax paid for 2021 | (1,00,000) | |
| Net cash used in Operating Activities | (70,000) | |
Note No. (1)
Calculation of Net Profit before Tax
| Profit and Loss balance as on 31st March, 2022 |
10,00,000 |
| Less: Profit & Loss balance on 31st March, 2021 |
(6,00,000) |
| 4,00,000 | |
| Add: Provision for tax of current year | 1,50,000 |
| 5,50,000 |
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RELATED QUESTIONS
Read the following hypothetical text and answer the given question on the basis of the same.
Sujata started a small enterprise under the 'Skill India Scheme'. As the business grew, the revenue started increasing and she decided to form 'Sujata Ltd.' to achieve her objectives with 10 other like minded persons. The financial position of the company is given in its Balance Sheet as at 31.3.2022:
| Balance Sheet of Sujata Ltd. as at 31st March, 2022 | ||||
|
|
Particulars | Note No. | 31.3.2022 | 31.3.2021 |
|
I. |
Equity and Liabilities: | |||
| 1. | Shareholders Funds | |||
| (a) | Equity Share Capital | 20,00,000 | 17,00,000 | |
| (b) | Reserves and Surplus | 3,00,000 | 4,00,000 | |
| (Statement of Profit and Loss) | ||||
| 2. | Non-current Liabilities | |||
| Long-term Borrowings | 3,00,000 | 2,00,000 | ||
| 3. | Current Liabilities | |||
| Trade Payables | 50,000 | 25,000 | ||
| Total | 26,50,000 | 23,25,000 | ||
| II. | Assets : | |||
| 1. | Non-Current Assets | |||
| (a) | Fixed Assets | |||
| (i) | Tangible Assets | 8,00,000 | 9,00,000 | |
| (ii) | Intangible Assets | 5,00,000 | 2,00,000 | |
| (b) | Non-current Investments | 3,00,000 | 4,00,000 | |
| 2. | Current Assets: | |||
| (a) | Inventories | 4,00,000 | 5,00,000 | |
| (b) | Trade Receivables | 1,50,000 | 1,25,000 | |
| (c) | Cash & Cash Equivalents | 5,00,000 | 2,00,000 | |
| Total | 26,50,000 | 23,25,000 | ||
Additional Information:
Depreciation of ₹1,00,000 was charged on Tangible Assets during the year.
On the basis of the above information prepare the 'Cash Flow Statement' of Sujata Ltd.
