question_answer

From the following balance sheet of Vikas Ltd. As on 31st March, 2016 and 2017, prepare a cash flow statement. 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		90,000	1,30,000
	(b) Reserves and Surplus	1	48,000	84,000
	2. Current Liabilities
	Trade Payables		17,400	22,000
	Total		1,55,400	2,36,000
II.	ASSETS
	1. Non-current Assets
	Fixed Assets
	2. Current Assets
	(a) Inventories		22,000	26,000
	(b) Trade Receivables		36,000	39,000
	(c) Cash and Cash Equivalents		4,000	5,000
	Total		1,55,400	2,36,000

Notes to Accounts

Particulars	2016 Amt (Rs.)	2017 Amt (Rs.)
1. Reserves and Surplus
General Reserve	30,000	55,000
Balance of statement of Profit and Loss	20,000	30,000
Preliminary Expenses	(2,000)	(1,000)
	48,000	84,000

Additional Information (i) Depreciation Charged on fixed assets for the year 2016-2017 was Rs. 20,000. (ii) Income tax Rs. 5,000 has been paid during the year.

Answer:

                                                            Cash Flow Statement                                                             for the year ended 31st March, 2017

	Particulars		31st March, 2017 Amt (Rs.)
I.	Cash Flow from Operating Activities
	Net Profit before Tax and Extraordinary Item		40,000
	Adjustments for
	(+) Depreciation	20,000
	Preliminary Expenses Written-off	1,000	21,000
	Operating Profit before Working Capital Changes		61,000
	(+) Increase in Current Liabilities and Decrease in Current Assets
	Trade Creditors	4,600
	(-) Increase in Current Assets and Decrease in Current Liabilities
	Stock	(4,000)
	Debtors	(3,000)	(2,400)
	Cash Flow from Operating Activities before Tax		58,600
II.	Cash Flow from Investing Activities
	Purchase of Fixed Assets	(92,600)
	Net Cash Used in Investing Activities		(92,600)
III.	Cash Flow from Financing Activities
	Issue of Share Capital	40,000
	Cash Flow from Financing Activities		40,000
	Net Increase in Cash and Cash Equivalent (I + II + III)		1,000
	(+) Cash and Cash Equivalent at the Beginning of the period		4,000
	Cash and Cash Equivalent at the End of the Period		5,000

            Working Notes             Dr                                                                     Fixed Assets Account                                                  Cr

Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To Balance b/d	93,400	By Depreciation A/c	20,000
To Bank A/c (Purchase)	92,600	By Balance c/d	1,66,000
(Balancing figure)
	1,86,000		1,86,000

            Calculation of Net Profit before Tax and Extraordinary Items

	Amt (Rs.)
Profit as per Balance Sheet (30,000 ? 20,000)	10,000
(+) Income Tax Paid	5,000
(+) Transfer to General Reserve	25,000
	40,000