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Question
On the basis of information given by Aradhana Ltd., prepare a Cash Flow Statement for the year ending 31st March 2021:
| Aradhana Ltd. Balance Sheet as on 31st March, 2021 | |||
| Particulars | Note No. | 31st March, 2020 | 31st March, 2021 |
| I. Equity and Liabilities | |||
| 1. Shareholder’s Funds | |||
| (a) Share Capital | 5,00,000 | 7,30,000 | |
| (b) Reserves and Surplus | 1 | 3,50,000 | 3,70,000 |
| 2. Non-current Liabilities | |||
| Long-term Borrowings | 2 | 4,00,000 | 2,00,000 |
| 3. Current Liabilities | |||
| (a) Trade Payables | 3 | 3,60,000 | 4,60,000 |
| (b) Short Term provisions | 4 | 3,25,000 | 3,20,000 |
| Total | 19,35,000 | 20,80,000 | |
| II. Assets | |||
| 1. Non-current Assets | |||
| (a)Fixed Assets | 5 | ||
| (i) Tangible Assets | 6 | 4,50,000 | 5,00,000 |
| (ii) Intangible Assets | 3,10,000 | 3,02,000 | |
| (b)Long-term Loans and Advances | 4,00,000 | 4,30,000 | |
| 2. Current Assets | |||
| (a) Inventories | 2,70,000 | 2,90,000 | |
| (b) Trade Receivables | 2,40,000 | 2,60,000 | |
| (c) Cash and Cash Equivalents | 2,65,000 | 2,98,000 | |
| Total | 19,35,000 | 20,80,000 | |
Note to Accounts
| Particulars | 31st March 2020 | 31st March 2021 |
| 1. Reserves and Surplus Statement of Profit and loss | 3,50,000 | 3,70,000 |
| 2. Long-term Borrowings 10% Debentures | 4,00,000 | 2,00,000 |
| 3. Trade Payables | ||
| Creditors | 2,40,000 | 2,60,000 |
| Bills Payable | 1,20,000 | 2,00,000 |
| 3,60,000 | 4,60,000 | |
| 4. Short-Term Provisions Provision for Tax | 3,25,000 | 3,20,000 |
| 5. Tangible Fixed Assets | ||
| Machinery | 5,50,000 | 6,60,000 |
| Less: Provision for Depreciation | 1,00,000 | 1,60,000 |
| 4,50,000 | 5,00,000 | |
| 6. Intangible Fixed Assets Patents | 3,10,000 | 3,02,000 |
Additional Information:
- Debentures were redeemed on 1st April,2020.
- Tax paid during the year ₹2,80,000.
Solution
| Aradhana Ltd. Cash Flow statement for the year ended 31.3.21 | |||
| Particulars | Details | Amount (`) | |
| A) Cash flow from Operating Activities | |||
| Net Profit Before Tax and Extraordinary Items (W.Note No. 1) | 2,95,000 | ||
| Adjustments for non-cash and non-operating items | |||
| Add:- Depreciation of the year | 60,000 | ||
| Amortisation of patents | 8,000 | ||
| Interest on Debentures | 20,000 | 88,000 | |
| Operating Profit Before working capital changes | 3,83,000 | ||
| Add:- Increase in creditors | 20,000 | ||
| Increase in Bills Payable | 80,000 | ||
| Less:- Increase in Inventories | 20,000 | ||
| Increase in Trade Receivables | 20,000 | 60,000 | |
| Cash generated from operations | 4,43,000 | ||
| Less:- Payment of Tax | (2,80,000) | ||
| Cash Flow from Operating Activities(A) | 1,63,000 | ||
| B) Cash Flow From Investing Activities | |||
| Purchase of Machinery | (1,10,000) | ||
| investment in long term loans and advances | (30,000) | ||
| Cash used in Investing Activities (B) | (1,40,000) | ||
| C) Cash Flow From Financing Activities | |||
| Issue of Equity shares | 2,30,000 | ||
| Payment of Interest | (20,000) | ||
| Redemption of Debentures | (2,00,000) | 10,000 | |
| D) Net Increase in cash and cash equivalents (A+B+C) | 33,000 | ||
| Add:- Opening Cash and Cash Equivalents | 2,65,000 | ||
| Closing Cash and Cash Equivalents | 2,98,000 | ||
Working Notes:-
| 1. Net Profit as per the statement of Profit and Loss | 20,000 |
| Add: Tax provided during the year | 2,75,000 |
| 2,95,000 |
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