question_answer
From the following summarised balance sheets of PQR Ltd. as on 31st March, 2016 and 2017, you are required to prepare the cash flow statement. Balance Sheet as at 31st March, 2017 and 2016 | | Particulars | Note No. | 31st March, 2017 Amt (Rs.) | 31st March, 2016 Amt (Rs.) |
| I. | EQUITY AND LIABILITIES | | | |
| | 1. Shareholders' Funds | | | |
| | Share Capital | | 35,00,000 | 30,00,000 |
| | Reserves and Surplus | 1 | 23,00,000 | 15,00,000 |
| | 2. Non-current Liabilities | | | |
| | Long-term Borrowings: 15% Debentures | | 10,00,000 | 15,00,000 |
| | 3. Current Liabilities | | | |
| | Trade Payables | | 12,50,000 | 8,00,000 |
| | Short-term Provisions | 2 | 5,50,000 | 5,00,000 |
| | Other Current Liabilities | 3 | 60,000 | 50,000 |
| | Total | | 86,60,000 | 73,50,000 |
| II. | ASSETS | | | |
| | 1. Non-current Assets | | | |
| | Fixed Assets | 4 | 47,50,000 | 40,00,000 |
| | Long-term Investments (At cost) | | 9,00,000 | 9,00,000 |
| | 2. Current Assets | | | |
| | Inventories | | 13,50,000 | 10,00,000 |
| | Trade Receivables | | 12,25,000 | 11,25,000 |
| | Cash and Cash Equivalents | | 4,35,000 | 3,25,000 |
| | Total | | 86,60,000 | 73,50,000 |
Notes to Accounts | | Particulars | 31st March, 2017 Amt (Rs.) | 31st March, 2016 Amt (Rs.) |
| 1. | Reserves and Surplus | | |
| | Balance in Statement of Profit and Loss | 22,50,000 | 15,00,000 |
| | Capital Reserve (Profit on sale of investments) | 50,000 | - |
| | | 23,00,000 | 15,00,000 |
| 2. | Short-term Provisions | | |
| | Proposed Dividend | 1,70,000 | 1,50,000 |
| | Provision for Tax | 3,80,000 | 3,50,000 |
| | | 5,50,000 | 5,00,000 |
| 3. | Other Current Liabilities | | |
| | Outstanding Expenses | 60,000 | 50,000 |
| | | 60,000 | 50,000 |
| 4. | Fixed Assets | | |
| | Fixed Assets (At cost) | 60,00,000 | 50,00,000 |
| | (-) Accumulated Depreciation | (12,50,000) | (10,00,000) |
| | | 47,50,000 | 40,00,000 |
Additional Information | (i) During the year ended 31st March, 2016, fixed assets with a net book value of Rs. 50,000 (accumulated depreciation Rs. 1,50,000) were sold for Rs. 40,000. |
| (ii) During the year ended 31st March, 2016, investments costing Rs. 4,00,000 were sold. |
| (iii) Debentures were redeemed at a premium of 10%. |
| (iv) Tax of Rs. 3,75,000 was paid. |
| (v) Debenture interest paid during the year ended 3lst March, 2016 was. Rs. 1,50,000. |
Answer:
Cash Flow Statement For the year ending 31 st March, 2017 | | Particulars | | Amt (Rs.) |
| I. | Cash Flow from Operating Activities | | |
| | Net Profit before tax and Extraordinary Item | | 13,75,000 |
| | (+) Non-cash and Non-operating Expenses | | |
| | Depreciation | 4,00,000 | |
| | Interest on Debentures | 1,50,000 | |
| | Loss on Sale of Fixed Assets | 10,000 | 5,60,000 |
| | Operating Profit before Working Capital Change | | 19,35,000 |
| | (+) Increase in Current Liabilities or Decrease in Current Assets | | |
| | Trade Payables | 4,50,000 | |
| | Outstanding Expenses | 10,000 | 4,60,000 |
| | (-) Decrease in Current Assets or Increases in Current Liabilities | | |
| | Inventories | (3,50,000) | |
| | Trade Receivables | (1,00,000) | (4,50,000) |
| | Cash Generated from Operations | | 19,45,000 |
| | (-) Income Tax Paid | | (3,75,000) |
| | Cash Flow from Operating Activities | | 15,70,000 |
| II. | Cash Flow from Investing Activities | | |
| | Proceeds from Sale of Assets (Machinery) | 40,000 | |
| | Proceeds from Sale of Investment | 4,00,000 | |
| | Purchase of Machinery | (12,00,000) | |
| | Purchase of Investment | (3,50,000) | |
| | Cash Used in Investing Activities | | (11,10,000) |
| III. | Cash Flow from Financing Activities | | |
| | Proceeds from Issue of Shares | 5,00,000 | |
| | Repayment of Debentures (5,00,000 + 50,000) | (5,50,000) | |
| | Interest Paid on Debentures | (1,50,000) | |
| | Proposed Dividend Paid | (1,50,000) | |
| | Cash Used in Financing Activities | | (3,50,000) |
| IV. | Net Increase in Cash and Cash Equivalents (I + II + III) | | 1,10,000 |
| | (+) Cash and Cash Equivalents in the Beginning of the Year | | 3,25,000 |
| V. | Cash and Cash Equivalents at the End of Year | | 4,35,000 |
Working Notes 1. Dr Plant and Machinery Account Cr | Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
| To Balance b/d | 50,00,000 | By Bank A/c | 40,000 |
| To Bank A/c | 12,00,000 | By Accumulated Depreciation A/c | 1,50,000 |
| (Purchase - Balancing figure) | | By Loss on Sale (Statement of Profit and loss) | 10,000 |
| | | By Balance c/d | 60,00,000 |
| | 62,00,000 | | 62,00,000 |
2. Dr Accumulated Depreciation Account Cr | Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
| To Plant and Machinery A/c (Transfer) | 1,50,000 | By Balance b/d | 10,00,000 |
| To Balance c/d | 12,50,000 | By Depreciation A/c (Balancing figure) | 4,00,000 |
| | | (Statement of Profit and loss) | |
| | 14,00,000 | | 14,00,000 |
3. Dr Provision for Tax Account Cr | Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
| To Bank A/c (Tax paid) | 3,75,000 | By Balance b/d | 3,50,000 |
| To Balance c/d | 3,80,000 | By Statement of Profit and Loss | 4,05,000 |
| | | (Provision for tax) (Balancing figure) | |
| | 7,55,000 | | 7,55,000 |
4. | | Amt (Rs.) |
| Surplus, i.e, Balance in Statement of Profit and Loss (Closing) | 23,00,000 |
| (-) Surplus, i.e Balance in Statement of Profit and Loss (Opening) | (15,00,000) |
| | 8,00,000 |
| (+) Proposed Dividend for the Current Year | 1,70,000 |
| Provisiond for Tax (WN 3) | 4,05,000 |
| Net Profit before Tax and Extraordinary Item | 13,75,000 |
