question_answer
From the following information, prepare a cash flow statement for Ravi Ltd. Balance sheets of Ravi Ltd as at 31st March, 2016 and 2017 are given below: 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) Equity Share Capital | | 25,00,000 | 35,00,000 |
| | (b) Reserves and Surplus | 1 | 4,00,000 | 50,000 |
| | 2. Non-current Liabilities | | | |
| | Long-term Borrowings (12% Debentures) | | 6,00,000 | 10,00,000 |
| | 3. Current Liabilities | | | |
| | Trade Payables | | 15,00,000 | 12,50,000 |
| | Total | | 50,00,000 | 58,00,000 |
| II. | ASSETS | | | |
| | 1. Non-current Assets | | | |
| | (a) Fixed Assets | | 20,00,000 | 28,00,000 |
| | (b) Non-current Investments | | 10,00,000 | 10,00,000 |
| | 2. Current Assets | | | |
| | (a) Trade Receivables | | 15,00,000 | 16,00,000 |
| | (b) Cash and Cash Equivalents | | 3,00,000 | 4,00,000 |
| | (c) Other Current Assets (Prepaid Expenses) | | 2,00,000 | - |
| | Total | | 50,00,000 | 58,00,000 |
Notes to Accounts | Particulars | 31st March, 2016 Amt (Rs.) | 31st March, 2017 Amt (Rs.) |
| 1. Reserves and Surplus | | |
| Statement of Profit and Loss | 4,00,000 | (2,00,000) |
| Securities Premium Reserve | - | 2,50,000 |
| | 4,00,000 | 50,000 |
Additional Information | (i) Debentures were issued on 1st April, 2016. |
| (ii) During the year, a machine included in fixed assets costing Rs. 12,00,000 was purchased and another machine of the book value of Rs. 3,00,000 was sold at a loss of Rs. 20,000. |
Answer:
Cash Flow Statement for the year ended 31st March, 2017 | | Particulars | | Amt (Rs.) |
| I. | Cash Flow from Operating Activities | | |
| | Net Loss During the Year (- Rs.2,00,000 ? Rs. 4,00,000) | | 6,00,000 |
| | Adjustments for | | |
| | (+) Depreciation on Fixed Assets (WN) | 1,00,000 | |
| | Loss on Sale of Fixed Assets | 20,000 | |
| | Interest on Debentures \[\left( 10,00,000\times 12/100 \right)\] | 1,20,000 | 2,40,000 |
| | Operating Profit before Working Capital Changes | | (3,60,000) |
| | (-) Decrease in Current Liabilities and Increase in Current Assets | | |
| | Increase in Trade Receivables | (1,00,000) | |
| | Decrease in Trade Payables | (2,50,000) | (3,50,000) |
| | (+) Increase in Current Liabilities and Decrease in Current Assets | | |
| | Decrease in Prepaid Expenses | | 2,00,000 |
| | Net Cash used in Operating Activities | | (58,10,000) |
| II. | Cash Flow from Investing Activities | | |
| | Sale of Fixed Assets (WN) | 2,80,000 | |
| | Purchase of Fixed Assets | (12,00,000) | |
| | Net Cash used in Investing Activities | | (9,20,000) |
| III. | Cash Flow from Financing Activities | | |
| | Cash Proceeds from Issue of Shares (Rs. 10,00,000 + Rs. 2,50,000*) | 12,50,000 | |
| | Proceeds- from Issue of Debentures | 4,00,000 | |
| | Interest Paid on Debentures | (1,20,000) | |
| | Net Cash Inflow from Financing Activities | | 15,30,000 |
| | Net Increase in Cash and Cash Equivalents (I + II + III) | | 1,00,000 |
| | (+) Cash and Cash Equivalents in the Beginnings | | 3,00,000 |
| | Cash and Cash Equivalents at the End of Period | | 4,00,000 |
Working Note Dr Fixed Assets Account Cr | Particulars | Amt (Rs.) | Particulars | Amt (Rs.) |
| To Balance b/d | 20,00,000 | By Bank A/c (Sale) | 2,80,000 |
| To Bank A/c (Purchase) | 12,00,000 | By Statement of Profit and Loss (Loss) | 20,000 |
| | | By Depreciation A/c (Balancing Figure) | 1,00,000 |
| | | By Balance c/d | 28,00,000 |
| | 32,00,000 | | 32,00,000 |
Note: *Increase in Securities premium reserve.
