question_answer
The summarised balance sheet of RK Ltd as at 31st March, 2016 and 2017 were as under: 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 | | 2,25,000 | 2,25,000 |
| (b) Reserves and Surplus | 1 | 1,78,000 | 1,89,000 |
| 2. Non-current Liabilities | | | |
| Mortgage Loan | | - | 1,35,000 |
| 3. Current Liabilities | | | |
| (a) Trade Payables | | 84,000 | 67,000 |
| (b) Short-term Provisions : Provision for Taxation | | 37,500 | 5,000 |
| Total | | 5,24,500 | 6,21,000 |
II. | ASSETS | | | |
| 1. Non-current Assets | | | |
| (a) Fixed Assets | | 2,00,000 | 1,60,000 |
| (b) Non-current Investments | | 25,000 | 30,000 |
| 2. Current Assets | | | |
| (a) Inventories | | 1,20,000 | 1,05,000 |
| (b) Trade Receivables | | 1,05,000 | 2,27,500 |
| (c) Cash and Cash Equivalents | | 74,500 | 98,500 |
| Total | | 5,24,500 | 6,21,000 |
Notes to Accounts Particulars | 2016 Amt (Rs.) | 2017 Amt (Rs.) |
1. Reserves and Surplus | | |
General Reserve | 1,50,000 | 1,55,000 |
Statement of Profit and Loss | 28,000 | 34,000 |
| 1,78,000 | 1,89,000 |
2. Short Term Provisions | | |
Provision for Taxation | 37,500 | 5,000 |
Additional Information (i) Investments costing Rs. 4,000 were sold during the year 2016-17 for Rs. 4,250. |
(ii) Provision for taxation made during the year was Rs. 4,500. |
(iii) During the year, part of the fixed assets costing Rs. 5,000 was sold for Rs. 6,000 and the profit was included in the statement of profit and loss. |
(iv) Dividend paid during the year amounted to Rs. 20,000. |
You are required to prepare the cash flow statement.
Answer:
Cash Flow Statement for the year ended 31 st March, 2017 | Particulars | | Amt (Rs.) |
I. | Cash Flow from Operating Activities | | |
| Net Profit before Taxation and Extraordinary Items (W.N) | | 35,500 |
| Adjustments for | | |
| (+) Depreciation | 35,000 | |
| (-) Profit on Sale of Investments | (250) | |
| Profit on Sale of Fixed Assets | (1,000) | 33,750 |
| Operating Profit before Working Capital Changes | | 69,250 |
| (+) Decrease in Current Assets and Increase in Current Liabilities | | |
| Inventories | 15,000 | |
| (-) Increase in Current Assets and Decrease in Current Liabilities | | |
| Trade Receivables | (1,22,500) | |
| Trade Payables | (17,000) | (1,24,500) |
| Cash used in Operating Activities | | (55,250) |
| (-) Income Tax Paid | | (37,000) |
| Net Cash used in Operating Activities | | (92,250) |
II. | Cash Flow from Investing Activities | | |
| Purchase of Investments | (9,000) | |
| Sale of Fixed Assets | 6,000 | |
| Sale of Investments | 4,250 | |
| Net Cash from Investing Activities | | 1,250 |
III. | Cash Flow from Financing Activities | | |
| Mortgage Loan | 1,35,000 | |
| Dividend Paid | (20,000) | |
| Net Cash from Financing Activities | | 1,15,000 |
| Net Increase in Cash and Cash Equivalent (I+II+III) | | 24,000 |
| Cash and Cash Equivalent in the Beginning of the Year | | 74,500 |
| Cash and Cash Equivalent at the End of the Year | | 98,500 |
Working Notes 1. Net Profit before Tax and Extraordinary Items Particulars | | Amt (Rs.) |
Closing Balance of Statement of Profit and Loss (31st March, 2016) | 34,000 | |
(-) Opening Balance of Statement of Profit and Loss (31st March, 2015) | (28,000) | |
(+) Interim Dividend | 20,000 | |
Provision for Taxation | 4,500 | |
Transfer to Reserve | 5,000 | |
| | 35,500 |
Dr Fixed Assets Account Cr Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
To Balance b/d | 2,00,000 | By Bank A/c | 6,000 |
To Statement of Profit and Loss | 1,000 | By Depreciation A/c (Balancing figure) | 35,000 |
(Profit on sale) | | By Balance c/d | 1,60,000 |
| 2,01,000 | | 2,01,000 |
3. Dr Investment Account Cr Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
To Balance b/d | 25,000 | By Bank A/c | 4,250 |
To Statement of Profit and Loss | 250 | By Balance c/d | 30,000 |
(Profit) | | | |
To Bank A/c (Balancing Figure) | 9,000 | | |
| 34,250 | | 34,250 |
4. Dr Provision for Taxation Account Cr Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
To Bank A/c (Balancing Figure) | 37,000 | By Balance b/d | 37,500 |
To Balance c/d | 5,000 | By Statement of Profit and Loss | 4,500 |
| | (Provision made) | |
| 42,000 | | 42,000 |