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Cash Flow Statment

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40 views

Cash Flow Statment

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ar7432
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Problem 01

Charles Ltd. made a profit of ₹ 1,00,000 after charging depreciation of ₹ 20,000 on assets
and a transfer to general reserve of ₹ 30,000. The goodwill amortized was ₹ 7,000, and the
gain on sale of machinery was ₹ 3,000. Other information available to you (Changes in the
value of current assets and current liabilities) are trade receivables showed an increase of
₹ 3,000; trade payables an increase of ₹ 6,000; prepaid expenses increase of ₹ 200; and
outstanding expenses a decrease of ₹ 2,000.
Ascertain cash flow from operating activities.
Cash flow from operating activities (Indirect Method)
Particulars Amount(Rs.)
Net Profit Before tax and Transfer to General reserve 100000
Adj. for Non Cash and Non operating expenses
Depreciation 20000
Transfer to general Reserve 30000
Amortisation of good will 7000
Gain on sale of machinery (3000)
Operating Profit Before Working capital Changes 154000
Working Capital Changes
Trade receivables (3000)
Trade payables 6000
Prepaid expenses (200)
Outstanding expenses (2000)
Cash flow from operating activities 154800
Problem 02
From the following information, calculate Cash Flow from Investing Activities:
₹
Purchase of Machine 2,50,000
Purchase of Investments 1,60,000
Purchase of Goodwill 1,00,000
Sale of Patents 40,000
Sale of Machine 35,000
Interest and Dividend received 10,000
Sale of Investment 50,000
A building was purchased as an investment out of surplus, which was let out for
commercial purposes. Rent received ₹ 20,000.

Cash Flow from Investing Activities


Particulars Amount
Purchase of Machine (250000)
Purchase of Investments (160000)
Purchase of Goodwill (100000)
Sale of Patents 40000
Sale of Machine 35000
Interest and Dividend received 10000
Sale of Investment 50000
Rent received 20000
Cash Flow from Investing Activities (355000)

Problem 03
From the following information, calculation Cash Flow from Financing Activities:
Particulars March 31, 2020 March 31, 2019
(₹) (₹)
Equity Share Capital 10,00000 9,00,000
Securities Premium Reserves 2,60,000 2,50,000
12% Debentures 1,00,000 1,50,000
Additional Information: Interest paid on debentures ₹ 18,000.

Cash Flow from Financing Activities


Particulars Amount
Issue of Share Capital 110000
Redemption of 12% debentures (50000)
Interest paid on debentures (18000)
Cash Flow from Financing Activities 42000

Problem 04
Following are the balance sheets of Krishna Ltd. Jaipur for the year 2021 and 2022.
Liabilities 31.3.21 31.3.22 Assets 31.3.21 31.3.22
Equity Capital 3,00,000 3,50,000 Machinery 5,10,000 6,20,000
15% Pref. Capital 2,00,000 1,00,000 Investments 30,000 80,000
R&S 1,10,000 2,70,000 Current Assets 2,00,000 3,05,000
15% Debentures 1,00,000 2,00,000 Cash-in hand 50,000 75,000
Current Liabilities 80,000 1,60,000
7,90,000 10,80,000 7,90,000 10,80,000
Additional Information:
➢ A machine with a book value of Rs.40,000 was sold for Rs.25,000.
➢ 15% preference shares were redeemed at a premium of 15% on 31-3-22 for Rs.1,00,000
➢ Dividend on equity shares @ 15% was paid for the year 2021 during 2022.
➢ Depreciation charged during 2022 was Rs.60,000
You are asked to prepare a cash flow as per AS-3 (Revised)

Machinery Account
Particulars Rs. Particulars Rs.
To Balance B/d 510000 By Depreciation 60000
To Bank A/c (purchase) 210000 By Bank A/c(sale) 25000
By Loss on Sale (40000-25000) 15000
By balance C/d 620000
720000 720000

2021- 510000 – 60000 – 25000-15000= 410000


2022 = 620000
Particulars Amount Amount
Cash Flow From Operating activities
Net profit before taxes and extraordinary items 160000
(Reserves and Surplus = 270000 -110000)
Adjustments for Non cash and Non- operating
Depreciation 60000
Loss on sale of machinery 15000
Interest paid (15% on 100000) 15000
Dividend Paid (15 % on 30000) 45000
Loss on Redemption of Preference shares 15000 150000
Cash flow before working capital changes 310000
Increase in Current assets (105000)
Increase in Current Liabilities 80000 (25000)
Cash Flow operating activities (A) 285000
Cash Flow From Investing activities
Sale of Machinery 25000
Purchase of Machinery (210000)
Purchase of Investment (80000 – 30000) (50000)
Cash Flow From Investing activities (B) (235000)
Cash Flow From financing activities
Issue of Shares 50000
Redemption of Preference shares at 15% premium (115000)
Issue of Debentures 100000
Interest paid (15% on 100000) (15000)
Dividend Paid (15 % on 30000) (45000)
Cash Flow From financing activities (C) (25000)
A+B+C 25000
+ Opening cash Balance (2021) 50000
Closing cash balance (2022) 75000

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