question_answer
From the following, calculate the net cash flow from operating activities. | Particulars | Note No. | 31st March, 2017 Amt (Rs.) | 31st March, 2016 Amt (Rs.) |
I. | EQUITY AND LIABILITIES | | | |
| 1. Shareholders? Funds | | | |
| (a) Share Capital | 1 | 1,87,500 | 1,87,500 |
| (b) Reserves and Surplus | 2 | 77,500 | (5,000) |
| 2. Non-current Liabilities (8% Debentures) | | 65,000 | 37,500 |
| 3. Current Liabilities | | | |
| (a) Short-term Borrowings | | 10,000 | 12,500 |
| (b) Trade Payables | | 30,000 | 27,500 |
| (c) Short-term Provisions | | 12,500 | 10,000 |
| Total | | 3,82,500 | 270,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| (a) Tangible Fixed Assets (Net) | | 2,15,000 | 1,55,000 |
| (b) Intangible Assets | | 2,15,000 | 1,55,000 |
| (c) Non-current Investments | | 31,250 | 20,000 |
| 2. Current Assets | | | |
| (a) Current Investments | | 1,250 | 3,750 |
| (b) Inventories | | 48,750 | 25,000 |
| (c) Trade Receivables | | 50,000 | 50,000 |
| (d) Cash and Cash Equivalents | | 32,500 | 6,250 |
| Total | | 3,82,500 | 2,70,000 |
Notes to Accounts | Particulars | 2017 (Rs.) | 2016 (Rs.) |
1. | Share Capital | | |
| Equity Share Capital | 1,37,500 | 1,12,500 |
| 5% Preference Share Capital | 50,000 | 75,000 |
2. | Reserves and Surplus | | |
| General Reserve | 37,500 | 30,000 |
| Statement of Profit and Loss | 37,500 | (35,000) |
| Securities Premium Reserve | 2,500 | - |
3. | Short-term Borrowings | | |
| 8% Bank Loan | 10,000 | 12,500 |
4. | Short-term Provisions | | |
| Provision for Tax | 12,500 | 10,000 |
5. | Intangible Assets | | |
| Goodwill | 3.750 | 10.000 |
Additional Information During the year, a piece of machinery costing Rs. 15,000 on which depreciation charged was Rs. 5,000 was sold for Rs. 5,000. Depreciation provided on fixed assets Rs. 15,000. Dividend on Equity shares @ 8% was paid on opening balance. Income tax Rs. 11,250 was provided. Additional debentures were issued at par on 1st October, 2015 and bank loan was repaid on the same date. At the end of the Year, preference shares were redeemed at a premium of 5%
Answer:
Calculation of Net Cash Flow from Operating Activities | Particulars | | Amt (Rs.) |
1. | Cash Flow from Operating Activities | | |
| Net Profit before Tax | | 1,04,000 |
| (+) Adjustment for Non-cash and Non-operating Items | | |
| Depreciation on Fixed Assets | 15,000 | |
| Loss on Sales of Machinery | 5,000 | |
| Interest on Debentures \[[(37,500\times 8/100)+(Rs.\,27,500\times 8/100\times 6/12)]\] | 4,100 | |
| Interest on Bank Loan \[[Rs.\,12,500\times 8/100\times 6/12)+(Rs.\,10,000\times 8/100\times 6/12)]\] | 900 | |
| Goodwill Amortised | 6,250 | |
| Premium on redemption of Preference Shares | 1,250 | 32,500 |
| Operating Profit before Working Capital Changes | | 1,36,500 |
| (-) Increase in Current Assets and Decrease Current Liabilities Inventories | | (23,750) |
| (+) Decrease in Current Assets and Increase in Current Liabilities Trade Payables | | 2,500 |
| (+) Net Cash Flow from Operating Activities before Tax | | 1,15,250 |
| (-) Tax Paid | | (8,750) |
| Net Cash Inflow from Operating Activities after Tax | | 1,06,500 |
Working Notes | Particulars | Amt (Rs.) |
1. | Calculation of Net Profit before Tax | |
| Closing balance of Profit and Loss A/c | 37,500 |
| (+) Opening Balance of Profit and Loss A/c (Debit) | 35,000 |
| (+) Transfer to Reserve | 7,500 |
| (+) Dividend on Equity Shares | 9,000 |
| (+) Dividend on Preference Shares | 3,750 |
| (+) Provision for Tax | 11,250 |
| Net Profit before Tax | 1,04,000 |
2. Dr Tangible Fixed Assets Account Cr Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
To Balance b/d | 1,55,000 | By Depreciation A/c | 15,000 |
To Bank A/c (Purchases) | 85,000 | By Bank A/c (Sale) | 5,000 |
| | By Profit and Loss (Loss) | 5,000 |
| | By Balance c/d | 2,15,000 |
| 2,40,000 | | 2,40,000 |
3. Dr Provision for Tax Account Cr Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
To Bank A/c (Balancing figure) | 8,750 | By Balance c/d | 10,000 |
To Balance c/d | 12,500 | By Profit and Loss A/c | 11,250 |
| 21,250 | | 21,250 |