question_answer
From the balance sheet and information given below, prepare cash flow statement. Balance Sheet as at ???. Particulars | 31st March, 2017 | 31st March, 2018 |
EQUITY AND LIABILITIES | | |
Creditors | 32,000 | 35,200 |
A?s Loan | 20,000 | - |
Loan from Bank | 32,000 | 40,000 |
Capital | 1,00,000 | 1,22,400 |
| 1,84,000 | 1,22,400 |
ASSETS | | |
Cash | 8,000 | 5,600 |
Debtors | 24,000 | 40,000 |
Stock | 28,000 | 20,000 |
Land | 32,000 | 40,000 |
Machinery | 64,000 | 44,000 |
Building | 28,000 | 48,000 |
| 1,84,000 | 1,97,600 |
During the year, machine costing Rs. 8,000 (Accumulated Depreciation Rs. 2,400) was sold for Rs. 4,000. The provisions for depreciation against machinery as on 31st March, 2017 and 31st March, 2018 were Rs. 20,000 and Rs. 32,000 respectively. Net profit for the year amounting to Rs. 36,000.
Answer:
Cash Flow Statement for the year ended 31st March, 2018 | Particulars | | Amt (Rs.) |
I. | Cash Flow from Operating Activities | | 36,000 |
| Net profit before tax and extraordinary items | | |
| (+) Non-cash and Non-operating expenses | 14,400 | |
| Depreciation on Machinery | 1,600 | 16,000 |
| Loss on sale of Machinery | | 52,000 |
| Operating profit before working capital changes | | |
| (+) Increase in Current Liabilities and Decrease in Current Assets | | |
| Creditors | 3,200 | |
| Stock | 8,000 | 11,200 |
| (-) Decrease in Current Liabilities and Increase in Current Assets | | |
| Debtors | (16,000) | (16,000) |
| Cash Flow from Operating Activities | | 47,200 |
II. | Cash Flow from Investing Activities | | |
| Proceeds from sale of Machinery | 4,000 | |
| Purchase of Land | (8,000) | |
| Purchase of Building | (20,000) | |
| Cash Used in Investing Activities | | (24,000) |
III. | Cash Flow from Financing Activities | | |
| Payment of A?s Loan | (20,000) | |
| Loan from Bank | 8,000 | |
| Drawings | (13,600) | |
| Cash Used in Financing Activities | | (25,600) |
IV. | Net increase in Cash and Cash Equivalents (I + II + III) | | (2,400) |
| (+) Cash and Cash Equivalent in the beginning of the year | | 8,000 |
V. | Cash and Cash Equivalent at the end of the year | | 5,600 |
Working Notes 1. Dr Machinery Account Cr Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
To Balance b/d | 84,000 | By Bank (Sale) | 4,000 |
(64,000 + 20,000) | | By Provision for Depreciation | 2,400 |
| | By Profit and Loss (Loss on Sale) | 1,600 |
| | By Balance c/d | 76,000 |
| | (44,000 + 32,000) | |
| 84,000 | | 84,000 |
2. Dr Provision for Depreciation Account Cr Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
To Machinery A/c | 2,400 | By Balance b/d | 20,000 |
To Balance c/d | 32,000 | By Deprecation A/c | 14,400 |
| 34,000 | | 34,400 |
3. Calculation of Drawings | Amt (Rs.) |
Capital at the beginning | 1,00,000 |
(+) Net Profit | 36,000 |
| 1,36,000 |
(-) Capital at the end | (1,22,400) |
Drawings | 13,600 |