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