Financial Accounting Cash Flow Solved Numerical Questions

Financial Accounting Cash Flow Solved Numerical Questions | Part One

A financial statement that represents the inflow and outflow of cash and cash equivalents of a company is called a cash flow statement. It shows how well a company can manage its cash position and generates enough cash to pay the obligations in the form of debt and also run the operational expenses.

1. Usha Ltd. arrived at a net income of ₹ 5, 00,000 for the year ended March 31, 2017. Depreciation for the year was ₹ 2,00,000. There was a profit of ₹ 50,000 on assets sold, which was transferred to the statement of profit and loss account. Trade Receivables increased during the year ₹ 40,000, and trade payables also increased by ₹ 60,000. Compute the cash flow operating activities by the indirect approach.

The solution to this question is as follows:

Cash Flow from Operating Activities as on March 31, 2017
Particulars		Amount (₹)	Amount (₹)
Net Profit during the year			5,00,000
Items to be adjusted:
	Add: Depreciation	2,00,000
	Less: Gain on sale of assets	(50,000)	1,50,000
Operating Profit before Working Capital changes			6,50,000
	Add: Increase in Trade Payables	60,000
	Less: Increase in Trade Receivables	(40,000)	20,000
Net Cash from Operations			6,70,000

2. From the information given below, you are required to calculate the cash paid for the inventory:

Particulars	(₹)
Inventory in the beginning	40,000
Credit Purchases	1,60,000
Inventory at the end	38,000
Trade payables in the beginning	14,000
Trade payables at the end	14,500

The solution to this question is as follows:

Trade Payables Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Cash (Balancing fig.)		1,59,500		Balance b/d		14,000
	Balance c/d		14,500		Purchases		1,60,000
			1,74,000				1,74,000

Therefore the cash paid for Inventory amounts to ₹ 1, 59,500.

3. For each of the following transactions, calculate the resulting cash flow and state the nature of cash flow, viz., operating, investing and financing.

(a) Acquired machinery for ₹ 2,50,000, paying 20% by cheque and executing a bond for the balance payable.

(b) Paid ₹ 2,50,000 to acquire shares in Informa Tech. and received a dividend of ₹ 50,000 after the acquisition.

(c) Sold machinery of original cost ₹ 2,00,000 with an accumulated depreciation of ₹ 1,60,000 for ₹

60,000.

The solution to this question is as follows:

(a)
NCERT ACT CLASS 12 Chp 6-9

Part-payment of ₹ 50,000 for acquiring machinery and ₹ 2,50,000 is related to investing activities.

(b)

	₹
Amount paid for acquiring shares	(2,50,000)
Dividend received	50,000
Net cash used in investing activities	(2,00,000)

Amount paid to acquire assets and dividends received is a part of investing activities.

4. The following is the profit and loss account of Yamuna Limited:

Statement of Profit and Loss of Yamuna Ltd., for the Year Ended March 31, 2017
Particulars		Note No.	Amount (₹)
i)	Revenue from Operations		10,00,000
ii)	Expenses
	Cost of Materials Consumed	1	50,000
	Purchase of Stock-in-trade		5,00,000
	Other Expenses	2	3,00,000
	Total Expenses		8,50,000
iii)	Profit before Tax (i – ii)		1,50,000

Additional information:

(i) Trade receivables decrease by ₹ 30,000 during the year.

(ii) Prepaid expenses increase by ₹ 5,000 during the year.

(iii) Trade payables increase by ₹ 15,000 during the year.

(iv) Outstanding expenses payable increased by ₹ 3,000 during the year.

(v) Other expenses included depreciation of ₹ 25,000.

Compute net cash from operations for the year ended March 31, 2017, by the indirect method.

The solution to this question is as follows:

Cash Flow from Operating Activities of Yamuna Limited as on March 31, 2017
Particulars			Amount ₹	Amount ₹

Net Profit earned during the year				1,50,000
Items to be added:
		Depreciation		25,000
Operating Profit before Working Capital changes				1,75,000
	Add:	Increase in Current Liabilities
		Outstanding Expenses	3,000
	Add:	Decrease in Current Assets
		Trade Receivables	30,000
		Stock	50,000	83,000
	Less:	Decrease in Current Liabilities
		Trade Creditors	(15,000)
	Less:	Increase in Current Assets
		Prepaid Expenses	(5,000)	(20,000)
Net Cash from Operations				2,38,000

5. Compute cash from operations from the following figures:

(i) Profit for the year 2016-17 is a sum of ₹ 10,000 after providing for depreciation of ₹ 2,000.

(ii) The current assets and current liabilities of the business for the year ended March 31, 2016, and 2015 are as follows:

Particular	March 31, 2016 (₹)	March 31, 2017 (₹)
Trade Receivables	14,000	15,000
Provision for Doubtful Debts	1,000	1,200
Trade Payables	13,000	15,000
Inventories	5,000	8,000
Other Current Assets	10,000	12,000
Expenses payable	1,000	1,500
Prepaid Expenses	2,000	1,000
Accrued Income	3,000	4,000
Income received in advance	2,000	1,000

The solution to this question is as follows:

Cash Flow Statement for the Year Ending March 31, 2017
Particulars	Details (₹)	Amount (₹)
Cash from Operating Activities
Net Profit		10,000
Items to be added:
Depreciation	2,000	2,000
Operating Profit before Working Capital Adjustments		12,000
Less: Increase in Current Assets
Trade Receivables	(1,000)
Accrued Income	(1,000)
Accrued Income	(2,000)
Other Current Assets	(3,000)
Inventories
Add: Increase in Current Liabilities
Provision for Doubtful Debts	200
Trade Payables	2,000
Expense Payable	500
Add: Decrease in Current Assets
Prepaid Expenses	(1,000)
Less: Decrease in Current Liabilities
Income received in advance	1,000

Net Cash From Operating Activities		7,700

6. From the following particulars of Bharat Gas Limited, calculate cash flows from investing activities. Also, show the workings clearly preparing the ledger accounts:

Balance Sheet of Bharat Gas Ltd. as on 31 Mar. 2016 and 31 Mar. 2017
Particulars	Note No.	Figures as the end of 2017 (₹)	Figures as at the end of reporting 2016 (₹)
II) Assets
1. Non-current Assets
a) Fixed assets
i) Tangible assets	1	12,40,000	10,20,000
ii) Intangible assets	2	4,60,000	3,80,000
b) Non-current investments	3	3,60,000	2,60,000

Notes	1	Tangible assets = Machinery
	2	Intangible assets = Patents

Notes

	Figures of the current year	Figures of the previous year

1. Tangible Assets
Machinery	12,40,000	10,20,000
2. Intangible Assets
Goodwill	3,00,000	1,00,000
Patents	1,60,000	2,80,000
	4,60,000	3,80,000
3. Non-current Investments
10% long-term investments	1,60,000	60,000
Investment in land	1,00,000	1,00,000
Shares of Amartex Ltd.	1,00,000	1,00,000
	3,60,000	2,60,000

Additional Information:

(a) Patents were written off to the extent of ₹. 40,000, and some patents were sold at a profit of ₹. 20,000.

(b) A machine costing ₹ 1,40,000 (Depreciation provided thereon ₹ 60,000) was sold for ₹ 50,000. Depreciation charged during the year was ₹ 1,40,000.

(c) On March 31, 2016, 10% of investments were purchased for ₹ 1,80,000, and some investments were sold at a profit of ₹ 20,000. Interest on investment was received on March 31, 2017.

(d) Amartax Ltd. paid dividends @ 10% on its shares.

(e) A plot of land had been purchased for investment purposes and let out for commercial use, and rent received ₹ 30,000.

The solution to this question is as follows:

Cash Flow from Investing Activities
Particulars		Amount ₹	Amount ₹
Cash Inflow
	Proceeds from Sale of Patents	1,00,000
	Proceeds from Sale of Machinery	50,000
	Proceeds from Sale of 10% Long-term Investment	1,00,000
	Interest received on 10% Long-term Investment	6,000
	Dividend Received from Amartax Ltd.	10,000
	Rent Received	30,000	2,96,000
Cash Outflow
	Purchase of Goodwill	(2,00,000)
	Purchase of Machinery	(4,40,000)
	Purchase of 10% Long-term Investment	(1,80,000)	(8,20,000)
Net Cash used in Investing Activities			(5,24,000)

Patents Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Balance b/d		2,80,000		Profit and Loss (written off)		40,000
	Profit and Loss (Profit on sale)		20,000		Bank (sale- Balancing figure)		1,00,000
					Balance c/d		1,60,000
			3,00,000				3,00,000

Machinery Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Balance b/d		10,20,000		Depreciation		1,40,000
	Bank (Purchases- Balancing figure)		4,40,000		Bank		50,000
					Profit and Loss		30,000
					Balance c/d		12,40,000
			14,60,000				14,60,000

10% Long-term Investment Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Balance b/d		60,000		Bank (Balancing figure)		1,00,000
	Bank		1,80,000
	Profit and Loss (Profit on sale)		20,000		Balance c/d		1,60,000

			2,60,000				2,60,000

7. From the following Balance Sheet of Mohan Ltd., prepare the cash flow Statement.

Balance Sheet of Mohan Ltd., as on 31st March 2016 and 31 March 2017
Particulars	Note No.	March 31, 2017 (₹)	March 31, 2016 (₹)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Equity share capital		3,00,000	2,00,000
b) Reserves and surplus		2,00,000	1,60,000
2. Non-current liabilities
a) Long-term borrowings	1	80,000	1,00,000
3. Current liabilities
Trade payables		1,20,000	1,40,000
Short-term provisions	2	70,000	60,000
Total		7,70,000	6,60,000
II) Assets
1. Non-current assets
Fixed assets	3	5,00,000	3,20,000
2. Current assets
a) Inventories		1,50,000	1,30,000
b) Trade receivables	4	90,000	1,20,000
c) Cash and cash equivalents	5	30,000	90,000
Total		7,70,000	6,60,000

Notes to accounts:

	2017	2016
1. Long-term borrowings
Bank Loan	80,000	1,00,000
2. Short-term provision
Proposed dividend	70,000	60,000
3. Fixed assets	6,00,000	4,00,000
Less: Accumulated Depreciation	1,00,000	80,000
(Net) Fixed Assets	5,00,000	3,20,000
4. Trade receivables
Debtors	60,000	1,00,000
Bills receivables	30,000	20,000
	90,000	1,20,000
5. Cash and cash equivalents
Bank	30,000	90,000

Additional Information:

Machine Costing ₹ 80,000 on which accumulated depreciation was ₹ 50,000 was sold for ₹ 20,000.

The solution to this question is as follows:

Cash Flow Statement of Mohan Ltd.
	Particulars			Amount ₹	Amount ₹
A.	Cash Flow from Operating Activities
	Profit as per the Balance Sheet (2,00,000 – 1,60,000)			40,000
	Proposed Dividend			70,000
	Net Profit before Taxation and Extraordinary items				1,10,000
	Adjustments:
		Depreciation		70,000
		Loss on Sale of Machine		10,000	80,000
	Operating Profit before Working Capital changes				1,90,000
		Add:	Decrease in Current Assets
			Debtors	40,000	40,000
					2,30,000
		Less:	Increase in Current Assets
			Inventories	(20,000)
			Bills Receivable	(10,000)
		Less:	Decrease in Current Liabilities
			Trade Payables	(20,000)	(50,000)
	Net Cash from Operations				1,80,000
B.	Cash Flow from Investing Activities
		Proceeds from Sale of Fixed Assets			20,000
		Purchases of Fixed Assets			(2,80,000)
		Net Cash Outflow from Investing Activity			(2,60,000)

C.	Cash Flow from Financing Activities
		Issue of Shares			1,00,000
		Bank Loan Paid			(20,000)
		Dividend Paid			(60,000)
	Net Cash from Financing Activities				20,000

D.	Net Decrease in Cash and Cash Equivalents (A+B+C)				(60,000)
		Add:	Cash and Cash Equivalents in the beginning		90,000

E.	Cash and Cash equivalents at the end				30,000

Fixed Assets Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Balance b/d		4,00,000		Bank		20,000
	Bank (Purchases- Balancing fig.)		2,80,000		Profit and Loss		10,000
					Accumulated Depreciation		50,000
					Balance c/d		6,00,000
			6,80,000				6,80,000

Accumulated Depreciation Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Fixed Assets		50,000		Balance b/d		80,000
	Balance c/d		1,00,000		Profit and Loss (Balance fig.)		70,000
			1,50,000				1,50,000

8. From the following balance sheets of Tiger Super Steel Ltd., prepare the cash flow statement:

Balance Sheet of Tiger Super Steel Ltd. as at 31st March 2014 and 31st March 2017
Particulars	Note No.	March 31, 2017 (₹)	March 31, 2016 (₹)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	1,40,000	1,20,000
b) Reserves and surplus	2	22,800	15,200
2. Current Liabilities
a) Trade payables	3	21,200	14,000
b) Other current liabilities	4	2,400	3,200
c) Short-term provisions	5	28,400	22,400
Total		2,14,800	1,74,800
II) Assets
1. Non-Current Assets
a) Fixed assets
i) Tangible assets	6	96,400	76,000
ii) Intangible assets		18,800	24,000
b) Non-current investments		14,000	4,000
2. Current Assets
a) Inventories		31,200	34,000
b) Trade receivables		43,200	30,000
c) Cash and Cash Equivalents		11,200	6,800
Total		2,14,800	1,74,800

Notes to accounts:

	2017	2016
1. Share Capital
Equity share capital	1,20,000	80,000
10% Preference share capital	20,000	40,000
	1,40,000	1,20,000
2. Reserves and surplus
General reserve	12,000	8,000
Balance in the statement of profit and loss	10,800	7,200
	22,800	15,200
3. Trade payables
Bills payable	21,200	14,000

4. Other current liabilities
Outstanding expenses	2,400	3,200

5. Short-term provisions
Provision for taxation	12,800	11,200
Proposed dividend	15,600	11,200
	28,400	22,400
6. Tangible assets
Land and building	20,000	40,000
Plant	76,400	36,000
	96,400	76,000

Additional Information:
Depreciation Charge on land & building ₹ 20,000, and Plant ₹ 10,000 during the year.

The solution to this question is as follows:

Cash Flow Statement of Tiger Super Steels Ltd
	Particulars			Amount ₹	Amount ₹
A.	Cash Flow from Operating Activities
	Profit as per the Balance Sheet (10,800 –7,200)			3,600
	General Reserve			4,000
	Proposed Dividend			15,600
	Provision for Taxation			12,800
	Net Profit before Taxation and Extraordinary				36,000
	Items to be added:
		Depreciation on Land and Building		20,000
		Depreciation on Plant		10,000
		Goodwill written off		5,200	35,200
	Operating Profit before Working Capital changes				71,200

		Add:	Increase in Current Liabilities
			Bills Payable	7,200
		Add:	Decrease in Current Assets
			Inventories	2,800	10,000
					81,200
		Less:	Increase in Current Assets
			Trade Receivables	(13,200)
		Less:	Decrease in Current Liabilities
			Outstanding Expenses	(800)	(14,000)
	Cash Generated from Operating Activities				67,200
		Less:	Income Tax paid		(11,200)
	Net Cash from Operating Activities				56,000

B.	Cash Flow from Investing Activities
		Purchases of Plant			(40,400)
		Purchases of Investment			(20,000)
	Net Cash used in Investing Activities				(60,400)

C.	Cash Flow from Financing Activities
		Issue of Equity Shares			40,000
		Dividend paid			(11,200)
		Redemption of 10% Preference Shares			(20,000)
	Net Cash from Financing Activities				8,800

D.	Net Increase in Cash and Cash Equivalent				4,400
		Add:	Cash and Cash Equivalent in the beginning		6,800
E.	Cash and Cash Equivalents at the end				11,200

Working Notes:

Plant Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	To Balance b/d		36,000		By Depreciation		10,000
	To Bank A/c (Purchases- Balancing figure)		50,400		By Balance c/d		76,400
			86,400				86,400

Net Profit before Tax		3,600
Profit and Loss Account		12,800
Less:	Provision for Tax	16,400

9. From the following information, prepare a cash flow statement.


Particulars	Note No.	31^st March 2015 (₹)	31^st March 2014 (₹)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital		7,00,000	5,00,000
b) Reserves and surplus		4,70,000	2,50,000
2. Non-current Liabilities
(8% Debentures)		4,00,000	6,00,000
3. Current Liabilities
a) Trade payables		9,00,000	6,00,000
Total		24,70,000	19,50,000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		7,00,000	5,00,000
ii) Intangible-Goodwill		1,70,000	2,50,000
2. Current assets
a) Inventories		6,00,000	5,00,000
b) Trade Receivables		6,00,000	4,00,000
c) Cash and cash equivalents		4,00,000	3,00,000
Total		24,70,000	19,50,000

Additional Information:

Depreciation Charge on the plant amount to ₹ 80,000.

Cash Flow Statement for the year ending March 31, 2015
	Particulars	Details (₹)	Amount (₹)
A.	Cash from Operating Activities
	Net Profit		2,20,000
	Items to be Added:
	Interest on Debentures	48,000
	Depreciation on Fixed Assets	80,000
	Goodwill Written-off	80,000	2,08,000
	Operating Profit before Working Capital Adjustments		4,28,000
	Add: Increase in Current Liabilities
	Creditors	3,00,000
	Less: Increase in Current Assets
	Inventories	(1,00,000)
	Trade Receivables	(2,00,000)	–
	Cash Generated from Operations		4,28,000
	Less: Tax Paid		–
	Net Cash From Operating Activities		4,28,000

B.	Cash From Investing Activities
	Purchase of Fixed Assets (WN)	(2,80,000)
	Net Cash From Investing Activities		(2,80,000)

C.	Cash From Financing Activities
	Issue of Share Capital	2,00,000
	Redemption of Debentures	(2,00,000)
	Interest Paid on Debentures	(48,000)	(48,000)
	Net Cash From Financing Activities (C)		(48,000)
	Net Increase in Cash (A + B + C)		1,00,000
	Add: Opening Cash and Cash Equivalents		3,00,000
	Closing Cash and Cash Equivalents		4,00,000

Working Note:

Fixed Assets Account
Dr.						Cr.
Particulars	J.F.	Amount (₹)	Particulars	J.F.	Amount (₹)
Balance b/d		5,00,000	Depreciation		80,000
Purchases (Balancing Figure)		2,80,000	Balance c/d		7,00,000

		7,80,000			7,80,000

10. From the following balance sheet of Yogeta Ltd., prepare the cash flow statement.


Particulars	Note No.	31^st March 2017 (₹)	31^st March 2016 (₹)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	4,00,000	2,00,000
b) Reserves and surplus-Surplus		2,00,000	1,00,000
2. Non-current Liabilities
a) Long-term borrowings	2	1,50,000	2,20,000
3. Current Liabilities
a) Short-term borrowings		1,00,000	–
(Bank overdraft)
b) Trade payables		70,000	50,000
c) Short-term provision		50,000	30,000
(Provision for taxation)
Total		9,70,000	6,00,000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		7,00,000	4,00,000
2. Current assets
a) Inventories		1,70,000	1,00,000
b) Trade Receivables		1,00,000	50,000
c) Cash and cash equivalents		–	50,000
Total		9,70,000	6,00,000

Notes to Accounts

Particulars	31st March 2017 (₹)	31st March 2016 (₹)
1. Share capital
a) Equity share capital	3,00,000	2,00,000
b) Preference share capital	1,00,000	–
	4,00,000	2,00,000
2. Long-term borrowings
Long-term loan	–	2,00,000
Long-term Rahul	1,50,000	20,000
	1,50,000	2,20,000

Additional Information:
Net Profit for the year after charging ₹ 50,000 as depreciation was ₹ 1,50,000. The dividend paid on shares was ₹ 50,000, Tax Provision created during the year amounted to ₹ 60,000.

The solution to this question is as follows:

Cash Flow Statement of Yogeta Ltd.
	Particulars	Amount ₹	Amount ₹
A.	Cash Flow from Operating Activities
	Profit as per Balance Sheet (2,00,000 –1,00,000)	1,00,000
	Proposed Dividend	50,000
	Provision for Taxation	60,000
	Net Profit before Taxation and Extraordinary items		2,10,000
	Items to be added:
	Depreciation	50,000	50,000
	Operating Profit before Working Capital changes		2,60,000
	Add: Increase in Current liabilities
	Trade Payable	20,000	20,000
			2,80,000
	Less: Increase in Current Assets
	Inventories	(70,000)
	Trade Receivable	(50,000)	(1,20,000)
	Cash Generated from Operating Activities		1,60,000

	Less: Income Tax paid		(40,000)
	Net Cash from Operations		1,20,000

B.	Cash Flow from Investing Activities
	Purchases of Fixed Assets		(3,50,000)
	Net Cash used in Investing Activities		(3,50,000)

C.	Cash Flow from Financing Activities
	Issue of Equity Shares		1,00,000
	Issue of Preference Shares		1,00,000
	Loan from Rahul		1,30,000
	Less: Repayment of Loan		(2,00,000)
	Dividend Paid		(50,000)
	Net Cash from Financing Activities		80,000

D.	Net decrease in Cash and Cash Equivalent (A+B+C)		(1,50,000)
	Add: Cash and Cash Equivalents in the beginning		50,000
E.	Cash and Cash Equivalents at the end (Bank Overdraft)		(1,00,000)

Working Notes:

Provision for Taxation Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Bank (Balancing figure)		40,000		Balance b/d		30,000
	Balance c/d		50,000		Profit and Loss		60,000
			90,000				90,000

Fixed Assets Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Balance b/d		4,00,000		Depreciation		50,000
	Bank		3,50,000		Balance c/d		7,00,000
			7,50,000				7,50,000

11. Following is the financial statement of Garima Ltd. Prepare the cash flow statement.


Particulars	Note No.	31^st March 2017 (₹)	31^st March 2016 (₹)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	4,40,000	2,80,000
b) Reserve and surplus-Surplus	2	40,000	28,000
2. Current Liabilities
a) Trade payables		1,56,000	56,000
c) Short-term provisions		12,000	4,000
(Provision for taxation)
Total		6,48,000	3,68,000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		3,64,000	2,00,000
2. Current assets
a) Inventories		1,60,000	60,000
b) Trade receivables		80,000	20,000
c) Cash and cash equivalents		28,000	80,000
d) Other current assets		16,000	8,000
Total		6,48,000	3,68,000

Notes to Accounts

Particulars	31st March 2017 (₹)	31st March 2016 (₹)
1. Share capital
a) Equity share capital	3,00,000	2,00,000
b) Preference share capital	1,40,000	80,000
	4,40,000	2,80,000
2. Reserve and surplus
Surplus in statement of profit and loss at the beginning of the year	28,000
Add: Profit of the year	16,000
Less: Dividend	4,000
Profit at the end of the year	40,000

Additional Information:

Interest paid on debenture ₹ 600
Dividend paid during the year ₹ 4,000
Depreciation charged during the year ₹ 32,000

The solution to this question is as follows:

Cash Flow Statement (Indirect Method)
	Particulars	Amount ₹	Amount ₹
A.	Cash Flow from Operating Activities
	Profit as per Balance Sheet (40,000 – 28,000)	12,000
	Proposed Dividend	4,000
	Provision for Taxation	12,000
	Net Profit before Taxation and Extraordinary items		28,000
	Items to be added:
	Interest paid on Debentures	600
	Depreciation	32,000	32,600
	Operating Profit before Working Capital changes		60,600
	Add: Increase in Current liabilities
	Trade Payables	1,00,000
	Less: Increase in Current Assets
	Other Current Assets	(8,000)
	Inventories	(1,00,000)
	Trade Receivables	(60,000)	(68,000)
	Cash generated from Operating Activities		(7,400)

	Less: Income Tax paid		(4,000)
	Net Cash used in Operating Activities		(11,400)

B.	Cash Flow from Investing Activities
	Purchase of Fixed Assets		(1,96,000)
	Net Cash used in Investing Activities		(1,96,000)

C.	Cash Flow from Investing Activities
	Issue of Equity Shares		1,00,000
	Issue of Preference Shares		60,000
	Less: Interest Paid on Debentures		(600)
	Less: Dividend Paid		(4,000)
	Net Cash from Financing Activities		1,55,400

D.	Net decrease in cash and cash equivalent (A+B+C)		(52,000)
	Add: Cash and Cash Equivalents in the beginning		80,000
E.	Cash and Cash Equivalents at the end		28,000

Working Notes:

Plant and Machinery Account
Dr.							Cr.
Date	Particulars	J.F.	Amount ₹	Date	Particulars	J.F.	Amount ₹
	Balance b/d		2,00,000		Depreciation		32,000
	Bank (Purchases- Balancing fig.)		1,96,000		Balance c/d		3,64,000
			3,96,000				3,96,000

12. From the following balance sheet of Computer India Ltd., prepare a cash flow statement.

(₹ in ‘000)
Particulars	Note No.	31^st March 2017 (₹)	31^st March 2016 (₹)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital		50,000	40,000
b) Reserves and surplus-Surplus	1	3,700	3,000
2. Non-Current Liabilities
10% Debentures		6,500	6,000
3. Current Liabilities
a) Short-term borrowings	2	6,800	12,500
b) Trade payables		11,000	12,000
c) Short-term provisions	3	10,000	8,000
Total		88,000	81,500
II) Assets
1. Non-current assets
a) Fixed assets	4	25,000	30,000
2. Current assets
a) Inventories		35,000	30,000
b) Trade receivables		24,000	20,000
c) Cash and cash equivalents-cash		3,500	1,200
d) Other current assets-prepaid exp.		500	300
Total		88,000	81,500

Notes to Accounts

	Particulars	31^st March 2017 (₹)	31^st March2016(₹)
1.	Reserve and surplus
	(i) Balance in the statement of profit and loss	1,200	1,000
	(ii) General reserve	2,500	2,000
		3,700	3,000
2.	Short-term borrowings
	Bank Overdraft	6,800	12,500

3.	Short-term provisions
	(i) Provision for taxation	4,200	3,000
	(ii) Proposed dividend	5,800	5,000
		10,000	8,000
4.	Fixed Assets:
	Fixed Assets	40,000	41,000
	Less: Accumulated Depreciation	(15,000)	(11,000)
		25,000	30,000

Additional Information:

Interest paid on Debenture ₹ 600

The solution to this question is as follows:

Cash Flow Statement of Computer India Ltd.
				(‘00,000)
	Particulars			Amount ₹	Amount ₹
A.	Cash Flow from Operating Activities
	Profit as per Balance Sheet (1,200 – 1,000)			200
	Proposed Dividend			5,800
	General Reserve			500
	Provision for Taxation			4,200
	Net Profit before Tax and Extraordinary items				10,700
	Items to be added
		Provision for Depreciation		4,000
		Interest paid on Debentures		600	4,600
	Operating Profit before Working Capital changes				15,300
	Adjustments
		Less:	Increase in Current Assets
			Trade Receivables	(4,000)
			Inventories	(5,000)
			Prepaid Expenses	(200)	(9,200)
					6,100
		Less:	Decrease in Current Liabilities
			Trade Creditors	(1,000)	(1,000)
	Cash generated from Operating Activities				5,100
		Less:	Income Tax Paid		(3,000)
	Net Cash from Operation				2,100

B.	Cash Flow from Investing Activities
		Sale of Fixed Assets			1,000
	Net Cash from Investing Activities				1,000

C.	Cash Flow from Financing Activities
		Issue of Equity Shares			10,000
		Issue of 10% Debentures			500
		Less:	Dividend paid		(5,000)
		Less:	Interest paid		(600)
	Net Cash from Financing Activities				4,900

D.	Net Increase in Cash and Cash Equivalent (A+B+C)				8,000
		Add:	Cash and Cash Equivalent in the beginning
			Cash	1,200
			Bank Overdraft	(12,500)	(11,300)

E.	Cash and Cash Equivalents at the end
			Cash	3,500
			Bank Overdraft	(6,800)	(3,300)

Financial Accounting Solved MCQs | Part Five

Financial Accounting Cash Flow Solved Numerical Questions | Part One