Question

2. The Balance Sheets of ABC Co. as at the end of 2017 and 2018 are given below:
Liabilities
Share Capital
Share Premium
General Reserve
Profit & Loss Account
12% Debentures
Provision for depreciation
on plant
Provision for depreciation
on furniture
Provision for taxation
Sundry Creditors
2017 2018
Assets
(Rs.) (Rs.)
1,00,000 1,50,000 Freehold land
5,000 Plant at cost
50,000 60,000 Furniture at cost
10,000 17,000 Investments at cost
70,000 50,000 Debtors
50,000 56,000 Stock
2017
(Rs.)
1,00,000
1,04,000
7,000
60,000
30,000
60,000
2018
(Rs.)
1,00.000
1,00,000
9,000
80,000
70,000
65,000
5,000
6,000 Cash
30,000
45,000
20,000 30,000
86,000 95,000
3.91.000 4.69.000
3.91.000
4,69.000
A plant purchased for Rs.4000 (Depreciation Rs.2000) was sold for cash for Rs.800 on
September 30,2018. On June 30, 2018, an item of furniture was purchased for Rs.2000. These
were the only transactions concerning fixed assets during 2018. A dividend of 22 2 % on
original shares was paid.
You are required to prepare a Funds Flow Statement and verify the results by preparing a
Schedule of Changes in Working Capital.​

Answer 1

Answer:

Cash Flow from Investing Activities

Particulars

Amount

(₹)

Amount

(₹)

Purchase of Machinery

(1,00,000)

Sale of Machinery

26,000

Net Cash Used in Investing Activities

(74,000)

Working Notes:

Machinery Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

To Balance b/d

5,00,000

Accumulated Depreciation A/c

20,000

To Bank A/c (Purchase- Bal. Fig.)

1,00,000

Bank A/c (Sale)

26,000

Profit and Loss A/c (Loss on Sale)

4,000

Balance c/d

5,50,000

6,00,000

6,00,000

Accumulated Depreciation Account

Dr.

Cr.

Particulars

Amount

(₹)

Particulars

Amount

(₹)

To Machinery A/c

20,000

Balance b/d

1,00,000

Balance c/d

1,70,000

Profit and Loss A/c (Dep. charged during the year- Bal. Fig.)

90,000

1,90,000

1,90,000