question_answer
From the following balance sheet of SS Ltd, prepare cash flow statement. Balance Sheet As at 31st March, 2016 and 2017 | Particulars | Note No. | 31st March, 2016 Amt (Rs.) | 31st March, 2017 Amt (Rs.) |
I. | EQUITY AND LIABILITIES | | | |
| 1. Shareholders? Funds | | | |
| (a) Share Capital | 1 | 8,00,000 | 10,00,000 |
| (b) Reserves and Surplus | 2 | 60,000 | 74,000 |
| 2. Non-current Liabilities | | | |
| 15% Debentures | | 1,20,000 | 1,30,000 |
| 3. Current Liabilities | | | |
| (a) Short-term Borrowings: Bank Overdraft | | 2,50,000 | 1,36,000 |
| (b) Trade Payables (Sundry creditors) | | 2,40,000 | 2,20,000 |
| (c) Short-term Provisions | 3 | 1,60,000 | 2,00,000 |
| Total | | 16,30,000 | 17,60,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| Fixed Assets | 4 | 6,00,000 | 5,00,000 |
| 2. Current Assets | | | |
| (a) Trade Receivables (Debtors) | | 4,00,000 | 4,80,000 |
| (b) Inventories (Stock) | | 6,00,000 | 7,00,000 |
| (c) Other Current Assets | | 6,000 | 10,000 |
| (d) Cash and Cash Equivalent | | 24,000 | 70,000 |
| Total | | 16,30,000 | 17,60,000 |
Notes to Accounts | Particulars | 2016 Amt (Rs.) | 2017 Amt (Rs.) |
1. | Share Capital | | |
| Equity Share Capital | 8,00,000 | 9,00,000 |
| 12% Preference Share Capital | - | 1,00,000 |
| | 8,00,000 | 10,00,000 |
2. | Reserves and Surplus | | |
| Statement of Profit and Loss | 20,000 | 24,000 |
| General Reserve | 40,000 | 50,000 |
3. | Short-term Provisions | | |
| Provision for Taxation | 60,000 | 84,000 |
| Proposed Dividend | 1,00,000 | 1,16,000 |
| | 1,60,000 | 2,00,000 |
4. | Fixed Assets (Tangible) | | |
| Fixed Assets | 8,20,000 | 8,00,000 |
| (-) Depreciation | (2,20,000) | (3,00,000) |
| | 6,00,000 | 5,00,000 |
Additional Information (i) Debenture Interest Paid Rs. 18,000. |
(ii) Preference Shares were issued at the end of the year. |
Answer:
Cash Flow Statement for the year ended at 31st March, 2017 | Particulars | | Amt (Rs.) |
I. | Cash Flow from Operating Activities | | |
| Net Profit before Tax and Extraordinary Activities (W.N.) | | 2,14,000 |
| Adjustments for | | |
| (+) Depreciation (3,00,000 ? 2,20,000) | 80,000 | |
| Interest Paid on Debentures | 18,000 | 98,000 |
| Operating Profit before Working Capital Changes | | 3,12,000 |
| (-) Increase in Current Assets and Decrease in Current Liabilities | | |
| Sundry Debtors | (80,000) | |
| Stock | (1,00,000) | |
| Other Current Assets | (4,000) | |
| Trade Payables | (20,000) | (2,04,000) |
| | | 1,08,000 |
| (-) Income Tax Paid | | (60,000) |
| Net Cash from Operating Activities | | 48,000 |
II. | Cash Flow from Investing Activities | | |
| Sale of Fixed Assets | 20,000 | |
| Net Cash from Investing Activities | | 20,000 |
III. | Cash Flow from Financing Activities | | |
| Issue of Equity Shares | 1,00,000 | |
| Issue of 12% Preference Shares | 1,00,000 | |
| Issue of 15% Debentures | 10,000 | |
| Debenture Interest Paid | (18,000) | |
| Dividend Paid | (1,00,000) | |
| Net Cash used in Financing Activities | | 92,000 |
| Net Increase in Cash and cash Equivalent [I+II+III] | | 1,60,000 |
| (+) Cash and Cash Equivalent at the beginning (24,000-2,50,000) | | (2,26,000) |
| Cash and Cash Equivalent at the End (70,000 ? 1,36,000) | | (66,000) |
Note1. It has been assumed that the tax provided during the previous accounting year Rs. 60,000 has been paid during the current accounting year and the tax provided for 2015-16 is Rs. 84,000. 2. The Proposed dividend of the previous year, Rs. 1,00,000 has been paid in current accounting year and the current year?s proposed dividend is added back to the current year?s profits to arrive at cash from operating activities. Working Note Calculation of Net Profit before Tax and Extraordinary Activities Particulars | | Amt (Rs.) |
Net Profit (24,000 ? 20,000) | 4,000 | |
(+) Transfer to General Reserve | 10,000 | |
Provision for Taxation | 84,000 | |
Proposed Dividend | 1,16,000 | |
| | 2,14,000 |