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Question
Redemption of debentures would result in inflow, outflow on no flow of cash? Give your answer with reason.
Solution
Redemption of debentures involves an outflow of cash. This is because at the time of redemption of debentures, a company is required to pay cash to its debentureholders.
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Following is the Balance Sheet of SN Ltd as at 31-3-2015:
S.N Ltd Balance Sheet as at 31-3-2015
| Particulars | Note No. | 31-03-2015 (Rs.) | 31-03-2014 (Rs.) |
|
I. Equity and Liabilities 1. Shareholder’s Funds a. Share Capital b. Reserve and Surplus 2. Non - Current Liabilities a) Long – term borrowings 3. Current Liabilities a) Short – term borrowings b) Short – term provisions |
1
2
3 4 |
2,50,000 1,00,000
2,25,000
75,000 35,000 |
2,00,000 (25,000)
2,50,000
25,000 45,000 |
| Total | 6,85,000 | 4,95,000 | |
|
II. Assets 1. Non – Current Assets a) Fixed Assets Tangible assets Intangible b) Non – Current Investments 2. Current Assets a) Current Investments b) Inventories c) Cash and Cash Equivalents |
5 6
7
|
5,01,500 10,000 50,000
25,000 53,500 45,000 |
3,60,000 15,000 37,500
30,000 22,500 30,000 |
| Total | 6,85,000 | 4,95,000 |
| Note No. | Particulars | 31-3-2015 (Rs.) | 31-3-2014 (Rs.) |
|
1.
|
Reserve and Surplus (Surplus i.e. Balance in Statement of Profit and Loss) |
1,00,000 |
(25,000) |
| 1,00,000 | (25,000) | ||
|
2.
|
Long term borrowings : 12 % Debentures |
2,25,000 |
2,50,000 |
| 2,25,000 | 2,50,000 | ||
|
3.
|
Short – term borrowings : Bank Overdraft |
75,000 |
25,000 |
| 75,000 | 25,000 | ||
|
4.
|
Short – term provisions Provisions for tax |
35,000 |
45,000 |
| 35,000 | 45,000 | ||
|
5.
|
Tangible Assets Machinery Accumulated Depreciation |
6,01,500 (1,00,000) |
4,10,500 (50,500) |
| 5,01,500 | 3,60,000 | ||
|
6.
|
Intangible Assets Goodwill |
10,000 |
15,000 |
| 10,000 | 15,000 | ||
|
7.
|
Inventories Stock in trade |
53,500 |
22,500 |
| 53,500 | 22,500 |
Additional Information
(i) 12% Debentures were redeemed on 31-3-2015
(ii) Tax Rs.35,000 was paid during the year
Prepare Cash flow Statement
Following was the Balance Sheet of M.M Ltd at on 31.3.2015.
M.M. Ltd Balance Sheet as at 31-3-2015
| Particulars | Note No. | 31-3-2015 (Rs.) | 31-3-2014 (Rs.) |
|
I. Equity and Liabilities 1. Shareholder’s Funds a. Share Capital b. Reserve and Surplus 2. Non - Current Liabilities a) Long – term borrowings 3. Current Liabilities a) Short – term borrowings b) Short – term provisions |
1
2
3 4 |
5,00,000 2,00,000
4,50,000
1,50,000 70,000 |
4,00,000 (50,000)
5,00,000
50,000 90,000 |
| Total | 13,70,000 | 9,90,000 | |
|
II. Assets 1. Non – Current Assets a) Fixed Assets Tangible assets Intangible assets b) Non – Current Investments 2. Current Assets a) Current Investments b) Inventories c) Cash and Cash Equivalents |
5 6
7
|
10,03,000 20,000 1,00,000
50,000 1,07,000 90,000 |
7,20,000 30,000 75,000
60,000 45,000 60,000 |
| Total | 13,70,000 | 9,90,000 |
| Note No | Particulars | 31-3-2015(Rs.) | 31-3-2014(Rs.) |
|
1.
|
Reserve and Surplus (Surplus i.e. Balance in Statement of Profit and Loss) |
2,00,000 |
(50,000) |
| 2,00,000 | (50,000) | ||
|
2.
|
Long term borrowings : 12 % Debentures |
4,50,000 |
5,00,000 |
| 4,50,000 | 5,00,000 | ||
|
3.
|
Short – term borrowings : Bank Overdraft |
1,50,000 |
50,000 |
| 1,50,000 | 50,000 | ||
|
4.
|
Short – term provisions Provisions for tax |
70,000 |
90,000 |
| 70,000 | 90,000 | ||
|
5.
|
Tangible Assets Machinery Accumulated Depreciation |
12,03,000 (2,00,000) |
8,21,000 (1,01,000) |
| 10,03,000 | 7,20,000 | ||
|
6.
|
Intangible Assets Goodwill |
20,000 |
30,000 |
| 20,000 | 30,000 | ||
|
7.
|
Inventories Stock in trade |
1,07,000 |
45,000 |
| 1,07,000 | 45,000 |
Additional Information
(i) 12% Debentures were redeemed on 31-3-2015
(ii) Tax Rs. 70,000 was paid during the year
Prepare Cash flow Statement.
Will 'acquisition of machinery by an issue of equity shares' be considered while preparing 'Cash Flow Statement'? Give reason in support of your answer.
Following is the Balance Sheets of Thermal Power Ltd. as at 31-3-2014
| Thermal Power Ltd Balance Sheet as at 31-3-2014 |
|||
| Particulars | Note No. |
2013-2014 Rs |
2012-2013 Rs |
|
I. Equity and Liabilities 1. Shareholder’s Funds a. Share Capital b. Reserve and Surplus 2. Non - Current Liabilities a. Long-term borrowings 3. Current Liabilities a. Trade Payables b. Short-Term Provisions |
1
|
12,00,000 3,00,000
2,40,000
1,79,000 50,000 |
11,00,000 2,00,000
1,70,000
2,04,000 77,000 |
| Total | 19,69,000 | 17,51,000 | |
|
II. Assets 1. Non – Current Assets a) Fixed Assets (i) Tangible assets (ii) Intangible b) Non – Current Investments 2. Current Assets a) Current Investments b) Inventories c) Trade Receivables d)Cash and Cash |
2 3
|
10,70,000 40,000
2,40,000 1,29,000 1,70,000 3,20,000 |
8,50,000 1,12,000
1,50,000 1,21,000 1,43,000 3,75,000 |
| Total | 19,69,000 | 17,51,000 | |
Notes to Accounts
| Note No | Particulars | 31-3-2015 | 31-3-2014 |
|
1
2
3
|
Reserve and Surplus (Surplus i.e. Balance in Statement of Profit and Loss) Tangible Assets Machinery Less: Accumulated Depreciation Intangible Assets Goodwill |
3,00,000
12,70,000 (2,00,000)
40,000 |
2,00,000
10,00,000 (1,50,000)
1,12,000 |
Additional Information:
During the year a piece of machinery, costing Rs 24,000 on which accumulated depreciation was Rs 16,000, was sold for Rs 6,000.
Prepare Cash Flow Statement
Following is the Balance Sheets of Wind Power Ltd as at 31.3.2014:
| Wind Power Ltd Balance Sheet as at 31.3.2014 |
|||
| Particulars | Note No |
2013-14 Rs |
2012-13 Rs |
|
I. Equity and Liabilities 1. Shareholder’s Funds a. Share Capital b. Reserve and Surplus 2. Non - Current Liabilities a. Long-term borrowings 3. Current Liabilities a. Trade Payables b. Short-Term Provisions |
1
|
48,00,000 12,00,000
9,60,000
7,16,000 2,00,000 |
44,00,000 8,00,000
6,80,000
8,16,000 3,08,000 |
| Total | 78,76,000 | 70,04,000 | |
|
II. Assets a) Fixed Assets (i) Tangible assets (ii) Intangible b) Non – Current Investments 2. Current Assets a) Current Investments b) Inventories c) Trade Receivables d)Cash and Cash Equivalents |
2 3
|
42,80,000 1,60,000
9,60,000 5,16,000 6,80,000 12,80,000 |
34,00,000 4,80,000
4,48,000 4,84,000 5,72,000 16,20,000 |
| Total | 78,76,000 | 70,04,000 | |
Notes to Accounts
| Note No |
Particulars | As On 31-3-2014 |
As On 31-3-2013 |
| 1 |
Reserve and Surplus |
12,00,000 |
8,00,000 |
|
2
|
Tangible Assets Machinery Less: Accumulated Depreciation |
50,80,000 (8,00,000) |
40,00,000 (6,00,000) |
|
3
|
Intangible Assets Goodwill |
1,60,000 |
4,80,000 |
Additional information
During the year a piece of machinery, costing Rs 96,000 on which accumulated depreciation was Rs 64,000 was sold for Rs 24,000.
Prepare Cash Flow Statement
Why is ‘Cash Flow statement’ prepared? State.
Net increase in working capital other than cash and cash equivalents will increase, decrease or not change cash flow from operating activities. Give reason in support of your answer.
State any two advantages of preparing cash flow statement.
Answer the following question:
State any one objective of preparing Cash Flow Statement.
State the purpose of preparing a ‘Cash Flow Statement’.
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 |
|
|
|
||||
|
2,20,000 |
2,68,750 |
|
2,20,000 |
2,68,750 |
|
|
|
|
|
|
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
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 |
|
|
|
|
|
|
|
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.
From the following Balance Sheets of B.C.R. Ltd as on 31-3-2010 and 31-3-2011.
Prepare a Cash Flow Statements:
|
Balance Sheets of B.C.R. Ltd. as on 31.3.2010 and 31.3.2011 |
|||||
|
Liabilities |
31-3-2010 Rs |
31-3-2011 Rs |
Assets |
31-3-2010 Rs |
31-3-2011 Rs |
|
Equity Shares Capital Profit and Loss Account Bank Loan Proposed Dividend Provision for tax Creditors |
5,00,000
2,00,000
1,00,000 50,000 30,000 55,000 |
7,00,000
3,50,000
50,000 70,000 50,000 52,000 |
Patents Equipment Investment Debtors Stock Bank |
1,00,000 5,00,000 – 80,000 55,000 2,00,000 |
95,000 5,00,000 1,00,000 1,30,000 3,00,000 |
|
|
|
||||
|
9,35,000 |
12,72,000 |
|
9,35,000 |
12,72,000 |
|
|
|
|
|
|||
Additional Information:
During the year Equipment costing Rs 1,00,000 was purchases. Loss on sale of Equipment amounted to Rs 12,000. Rs 18,000 deprecation charged on Equipment.
From the following particulars of Bharat Gas Limited, calculate Cash Flows from Investing Activities. Also, show the workings clearly preparing the ledger accounts:
Balance Sheet of Bharat Gas Ltd. as on 31 Mar. 2016 and 31 Mar. 2017
| Particulars | Note No. | Figures as the end of 2017 (Rs) |
Figures as at the end of reporting 2016 (Rs) |
| II) Assets | |||
|
1. Non-current Assets |
|||
|
a) Fixed assets |
|||
|
i) Tangible assets |
1 | 12,40,000 | 10,20,000 |
|
ii) Intangible assets |
2 | 4,60,000 | 3,80,000 |
|
b) Non-current investments |
3 | 3,60,000 | 2,60,000 |
Notes 1 tangible assets = Machinery
2 Intangible assets = Patents
Notes
| Figures of current year | Figures of previous year | |
| 1. Tangible Assets | ||
|
Machinery |
12,40,000 | 10,20,000 |
| 2. Intangible Assets | ||
|
Goodwill |
3,00,000 | 1,00,000 |
|
Patents |
1,60,000 | 2,80,000 |
| 4,60,000 | 3,80,000 | |
| 3. Non-current Investments | ||
|
10% long term investments |
1,60,000 | 60,000 |
|
Investment in land |
1,00,000 | 1,00,000 |
|
Shares of Amartex Ltd. |
1,00,000 | 1,00,000 |
| 3,60,000 | 2,60,000 | |
Additional Information:
(a) Patents were written-off to the extent of Rs. 40,000 and some Patents were sold at a profit of Rs. 20,000.
(b) A Machine costing Rs. 1,40,000 (Depreciation provided thereon Rs. 60,000) was sold for Rs. 50,000. Depreciation charged during the year was Rs. 1,40,000.
(c) On March 31, 2016, 10% Investments were purchased for Rs. 1,80,000 and some Investments were sold at a profit of Rs. 20,000. Interest on Investment was received on March 31, 2017.
(d) Amartax Ltd. paid Dividend @ 10% on its shares.
(e) A plot of Land had been purchased for investment purposes and let out for commercial use and rent received Rs. 30,000.
From the following information, prepare cash flow statement:
| Particulars | Note No. | 31st March 2015 (Rs) |
31st March 2014 (Rs) |
| I) Equity and Liabilities | |||
|
1. Shareholders’ Funds |
|||
|
a) Share capital |
7,00,000 | 5,00,000 | |
|
b) Reserves and surplus |
4,70,000 | 2,50,000 | |
|
2. Non-current Liabilities |
|||
|
(8% Debentures) |
4,00,000 | 6,00,000 | |
|
3. Current Liabilities |
|||
|
a) Trade payables |
9,00,000 | 6,00,000 | |
| Total | 24,70,000 | 19,50,000 | |
| II) Assets | |||
|
1. Non-current assets |
|||
|
a) Fixed assets |
|||
|
i) Tangible |
7,00,000 | 5,00,000 | |
|
ii) Intangible-Goodwill |
1,70,000 | 2,50,000 | |
|
2. Current assets |
|||
|
a) Inventories |
6,00,000 | 5,00,000 | |
|
b) Trade Receivables |
6,00,000 | 4,00,000 | |
|
c) Cash and cash equivalents |
4,00,000 | 3,00,000 | |
| Total | 24,70,000 | 19,50,000 |
Additional Information:
Depreciation Charge on Plant amount to Rs. 80,000.
Which one is Cash Outflows from investing activities?
Classify the following activity into operating activities, investing activities, financing activities or cash activities
"Cash credit"
Assertion (A): Buy-back of equity shares comes under financing activities.
Reason (R): Financing activities are the activities that result in a change in the size composition of the owner's capital and borrowing of the enterprise from other sources.
Statement of cash flows includes:
Expenses paid in advance at the end of the year are ______ in ______ activities while preparing the Cash Flow Statement.
