Ques.1) Prepare Cash Flow Statement from the following information of ABC Ltd.

2022-23 2021-22 2022-23 2021-22

Liabilities Assets
(Rs.) (Rs.) (Rs.) (Rs.)
Equity Share Capital 400000 300000 Goodwill 90000 115000
12% Preference Share Capital 100000 150000 Building 170000 200000
8% Debentures 70000 40000 Plant 200000 80000
P&L Account 48000 30000 Debtors 200000 160000
Creditors 133000 97000 Stock 109000 77000
Bills Payable 16000 20000 Bills Receivables 30000 20000
Provision for Taxation 50000 40000 Bank 8000 10000
Cash 10000 15000
817000 677000 817000 677000
Additional Information:
a) Depreciation Rs. 10000 & Rs. 20000 has been charged on Plant & Building
respectively.
b) Plant costing Rs. 10000 (accumulated dep. Rs. 2000) was sold for Rs.5000.
c) Proposed Dividend during the year 2022-23 and 2021-22 is Rs. 75000 & Rs. 60000
respectively.
d) Equity Dividend is paid @ 10%.
e) Tax of Rs. 35000 paid.
f) Preference share capital was redeemed at a premium of 6%.

Sol.1) Working Notes:

Plant A/c
Dr. Cr.
Particulars Amt (Rs.) Particulars Amt (Rs.)
Bal. b/d 80,000 Depreciation A/c 10,000
Cash A/c (Sales) 5,000
Cash A/c (Purchases) b/f 1,38,000 P&L A/c (Loss on Sale) 3,000
Bal. c/d 2,00,000
TOTAL 2,18,000 TOTAL 2,18,000

Building A/c
Dr. Cr.
Particulars Amt (Rs.) Particulars Amt (Rs.)
Bal. b/d 2,00,000 Depreciation A/c 20,000
Cash A/c (Sales) b/f 10,000
Bal. c/d 1,70,000
TOTAL 2,00,000 TOTAL 2,00,000

Provision for Taxation A/c

Dr. Cr.
Particulars Amt (Rs.) Particulars Amt (Rs.)
Cash A/c (Tax Paid) 35,000 Bal. b/d 40,000
Bal. c/d 50,000 P&L A/c (b/f) 45,000
TOTAL 85,000 TOTAL 85,000
Pref. Dividend= 1,50,000 X 12%= Rs. 18,000
Equity Dividend= 3,00,000 X 10%= Rs. 30,000
Premium on Redemption of Pref. Shares= 50,000 X 6%= Rs. 3,000
Int. on Debentures= 40,000 X 8%= Rs. 3,200

ABC LTD.
CASH FLOW STATEMENT
Particulars Amt. (Rs.) Amt. (Rs.)
(A) CASH FLOW FROM OPERATING ACTIVITIES
Net Profit as per P&L A/c 18000
Add: Provision for Tax 45000
Proposed Dividend 60000
Pref. Dividend 18000
Equity Dividend 30000
Profit before Tax & Dividend 171000
Add: Non-operating Expenses
Goodwill written off 25000
Depreciation on Plant 10000
Depreciation on Building 20000
Loss on Sale of Plant 3000
Premium on Redemption of Preference Shares 3000
Interest on Debentures 3200 64200
Less: Non-operating Incomes -----
Operating Profit before Working Capital Changes 235200
Add: Dec. in CA & Inc. in CL
Creditors 36000 36000
Less: Inc. in CA & Dec. in CL
Debtors (40000)
Stock (32000)
B/R (10000)
B/P (4000) (86000)
Cash from Operating Activities 185200
Less: Tax Paid (35000)
Net Cash from Operating Activities 150200
(B) CASH FLOW FROM INVESTING ACTIVITIES
Sale of Plant 5000
Purchase of Plant (138000)
Sale of Building 10000
Net Cash Used in Investing Activities (123000)
(C) Cash Flow from Financing Activities
Issue of Equity Shares 100000
Redemption of 12% Preference Shares (50000)
Issue of 8% Debentures 30000
Proposed Dividend (60000)
Preference Dividend (18000)
Equity Dividend (30000)
Premium on Redemption of Preference Shares (3000)
Interest on Debentures (3200)
 Net Cash used in Financing Activities (34200)
Net decrease in Cash (A+B+C) (7000)
Add: Cash & Cash Equivalents in the beginning of the period 25000
Cash & Cash Equivalents. at the end of the period 18000

Ques.2) Prepare Cash Flow Statement from the Balance Sheets of M/s Black and White as on
1.1.2024 and 31.12.2024.
Liabilities 1.1.2024 31.12.2024 Assets 1.1.2024 31.12.2024
Creditors 40,000 44,000 Cash 10,000 7,000
Mr. White’s loan 25,000 ------- Debtors 30,000 50,000
Loan from Bank 40,000 50,000 Stock 35,000 25,000
Capital 1,25,000 1,53,000 Machinery 80,000 55,000
Land 40,000 50,000
Building 35,000 60,000
2,30,000 2,47,000 2,30,000 2,47,000
Additional information:
a) During the year machine costing Rs. 10,000 (accumulated depreciation Rs. 3,000)
was sold for Rs. 5,000.
b) Provision for depreciation against machinery as on 1.1.2024 was Rs. 25,000 and as on
31.12.2024 Rs. 40,000.
c) Net profit for the year 2024 amounted to Rs. 45,000.

Sol.2) Working Notes:

Machinery A/c
Dr. Cr.
Particulars Amt (Rs.) Particulars Amt (Rs.)
Bal. b/d 1,05,000 Depreciation A/c 3,000
(80,000 + 25,000)
Cash A/c (Sales) 5,000
P&L A/c (Loss on Sale) 2,000
Bal. c/d 95,000
(55,000 + 40,000)
TOTAL 1,05,000 TOTAL 1,05,000

Depreciation A/c
Dr. Cr.
Particulars Amt (Rs.) Particulars Amt (Rs.)
Machinery A/c 3,000 Bal. b/d 25,000
Bal. c/d 40,000 P&L A/c (b/f)* 18,000
TOTAL 43,000 TOTAL 43,000

Capital A/c
Dr. Cr.
Particulars Amt (Rs.) Particulars Amt (Rs.)
Cash A/c (Drawings) b/f* 17,000 Bal. b/d 1,25,000
Bal. c/d 1,53,000 P&L A/c (Profit) 45,000
TOTAL 1,70,000 TOTAL 1,70,000
 M/s Black & White
Cash Flow Statement
Particulars Amt. (Rs.) Amt. (Rs.)
(A) CASH FLOW FROM OPERATING ACTIVITIES
Net Profit as per P&L A/c 45,000
Add: Provision for Tax ------
Profit before Tax 45,000
Add: Non-operating Exp.
Depreciation 18,000
Loss on sale of Machinery 2,000 20,000
Less: Non-operating Incomes -----
Operating Profit before Working Capital Changes 65,000
Add: Dec. in CA & Inc. in CL
Stock 10,000
Creditors 4,000
Less: Inc. in CA & Dec. in CL
Debtors (20,000) (6,000)
Net Cash from Operating Activities 59,000
(B) CASH FLOW FROM INVESTING ACTIVITIES
Sale of Machinery 5,000
Purchase of Land (10,000)
Purchase of Building (25,000)
Net Cash used in Investing Activities (30,000)
(C) CASH FLOW FROM FINANCING ACTIVITIES
Payment of Mr. White’s Loan (25,000)
Loan from Bank 10,000
Drawings (17,000)
Net Cash used in Financing Activities (32,000)
Net decrease in Cash (A+B+C) (3,000)
Add: Cash & Cash Eq. in the beginning of the period 10,000
Cash & Cash Eq. at the end of the period 7,000