Question

CASH FLOW STATEMENT

Q1 The following is the Balance Sheet of Pawan Ltd. as at 31st March, 2019, prepare a Cash Flow Statement:
Particulars
Note No.
2018-19 (Rs.)
2017-18 (Rs.)

I. EQUITY AND LIABILITIES
(1) Shareholders Funds
(a) Share Capital
(b) Reserves and Surplus
(2) Non-Current Liabilities
Long-term Borrowings
(3) Current Liabilities
(a) Trade Payables
(b) Short Term-Provisions




1


12,00,000
3,00,000

2,40,000

1,79,000
50,000


11,00,000
2,00,000

1,70,000

2,04,000
77,000

Total


19,69,000
17,51,000

II. ASSETS
(1) Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets
(ii) Intangible Assets
(2) Current Assets
(a)Current Investments
(Marketable Securities)
(b) Inventories
(c) Trade Receivables
(d)Cash and Cash Equivalents




2
3



10,70,000
40,000

2,40,000

1,29,000
1,70,000
3,20,000



8,50,000
1,12,000

1,50,000

1,21,000
1,43,000
3,75,000

Total

19,69,000
17,51,000















Note to Accounts
2018-19
(Rs.)
2017-18 (Rs.)

Reserves and Surplus:
Surplus, i.e., Balance in Statement of Profit and loss
(2) Tangible Assets:
Machinery
Less: Accumulated Depreciation

Intangible Assets:
Goodwill

3,00,000

1270000
(2,00000)
1070000

40,000

2,00,000

10,00,000
(1,50,000)
8,50,000

1,12,000


Additional information:

During the year a piece of machinery, costing Rs. 24,000 on which accumulated depreciation was Rs. 16,000, was sold for Rs. 6,000.


Q 2 The following is the Balance Sheet of NXG Ltd. as at 31st March, 2019, prepare a Cash Flow Statement:
Balance Sheet as at 31st March, 2017
Particulars
Note No.
31.3.2019
31.3.2018






I – EQUITY AND LIABILITIES




1. Shareholder’s Funds:




(a) Share Capital

15,00,000
10,00,000

(b) Reserves and Surplus (Balance in Statement of Profit and Loss)

7,50,000
6,00,000

2. Non-Current Liabilities:




Long-term Borrowings
1
1,00,000
2,00,000

3. Current Liabilities:




(a) Trade Payables

1,00,000
1,10,000

(b) Short-term Provisions
2
95,000
80,000

Total

25,45,000
9,90,000

II – ASSETS




1. Non-Current Assets:




(a) Fixed Assets:




(i) Tangible Assets
3
10,10,000
9,00,000

(ii) Intangible Assets
4
2,80,000
2,00,000

(b) Non-Current Investments:

5,00,000
—

2. Current Assets:




(a) Inventories

1,80,000
1,00,000

(b) Trade Receivables

2,00,000
1,50,000

(c) Cash and Cash Equivalents
5
3,75,000
6,40,000

Total

25,45,000
19,90,000






Notes to Accounts :

Note No.
Particulars
31.3.2019
31.3.2018

1.
Long-term Borrowings :




9% Debentures
1,00,000
2,00,000




1,00,000
2,00,000

2.
Short-term Provisions :




Provision for Tax
95,000
80,000



95,000
80,000

3.
Tangible Assets :




Plant and Machinery
12,10,000
11,40,000


Accumulated Depreciation
(2,00,000)
(2,40,000)



10,10,000
9,00,000

4.
Intangible Assets :




Goodwill
2,80,000
2,00,000



2,80,000
2,00,000

5.
Cash and Cash Equivalents :




(i) Cash in Hand
70,000
3,50,000


(ii) Bank Balance
3,05,000
2,90,000



3,75,000
6,40,000

Additional Information :
(i) During the year, a machine costing Rs.80,000 on which accumulated depreciation was Rs.50,000 was sold for Rs.30,000.
(ii) 9% Debentures were redeemed on 31st March, 2019.
6​

Answer 1

• Net cash generated from operating activities 3,65,000
• Net cash used in investing activities (2,14,000)
• Net cash generated from financing activities 1,30,000
• Net increase in cash and cash equivalents 2,81,000

Solution -

1) Cash Flow Statement for the year ended 31st March, 2019

Cash Flow from Operating Activities:

Net Profit for the year 3,00,000

Add: Depreciation 2,00,000

Loss on Sale of Machinery (24,000 - 16,000) 8,000

Decrease in Trade Receivables 21,000

Increase in Inventories (1,29,000 - 1,21,000) 8,000

Increase in Trade Payables (1,79,000 - 1,70,000) 9,000

Increase in Short-term Provisions (50,000 - 77,000) 27,000

Cash generated from operations 3,65,000

Net cash generated from operating activities 3,65,000

Cash Flow from Investing Activities:

Proceeds from Sale of Machinery 6,000

Purchase of Tangible Assets (10,70,000 - 8,50,000) 2,20,000

Net cash used in investing activities (2,14,000)

Cash Flow from Financing Activities:

Proceeds from Share Capital 2,00,000

Repayment of Long-term Borrowings (2,40,000 - 1,70,000) 70,000

Net cash generated from financing activities 1,30,000

Net increase in cash and cash equivalents 2,81,000

Cash and cash equivalents at the beginning of the year 3,20,000

Cash and cash equivalents at the end of the year 6,01,000

2) Cash Flow Statement for the year ended 31st March, 2019

Cash Flow from Operating Activities:

Net Profit for the year 1,50,000

Add: Depreciation 2,40,000

Loss on Sale of Machinery (80,000 - 50,000) 30,000

Increase in Trade Payables (1,00,000 - 1,10,000) (10,000)

Decrease in Trade Receivables (2,00,000 - 1,50,000) 50,000

Decrease in Inventories (1,80,000 - 1,00,000) 80,000

Increase in Short-term Provisions (95,000 - 80,000) 15,000

Cash generated from operations 3,55,000

Net cash generated from operating activities 3,55,000

Cash Flow from Investing Activities:

Proceeds from Sale of Machinery 30,000

Purchase of Tangible Assets (10,10,000 - 9,00,000) 1,10,000

Purchase of Non-current Investments —

Net cash used in investing activities (80,000)

Cash Flow from Financing Activities:

Proceeds from Share Capital 5,00,000

Repayment of Long-term Borrowings (1,00,000 - 2,00,000) (1,00,000)

Net cash generated from financing activities 4,00,000

Net increase in cash and cash equivalents 6,75,000

Cash and cash equivalents at the beginning of the year 6,40,000

Cash and cash equivalents at the end of the year 13,15,000

* Additionally, the redemption of 9% debentures has been considered as a financing activity, but it's important to note that it is not a cash inflow, it's a cash outflow, so we have to subtract the redemption amount from the net cash generated from financing activities.

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Answer 2

Answer:

Net cash generated from operating activities 3,65,000

Net cash used in investing activities (2,14,000)

Net cash generated from financing activities 1,30,000

Net increase in cash and cash equivalents 2,81,000

Explanation:

1) Cash Flow Statement for the year ended 31st March, 2019

Cash Flow from Operating Activities:

Net Profit for the year 3,00,000

Add: Depreciation 2,00,000

Loss on Sale of Machinery (24,000 - 16,000) 8,000

Decrease in Trade Receivables 21,000

Increase in Inventories (1,29,000 - 1,21,000) 8,000

Increase in Trade Payables (1,79,000 - 1,70,000) 9,000

Increase in Short-term Provisions (50,000 - 77,000) 27,000

Cash generated from operations 3,65,000

Net cash generated from operating activities 3,65,000

Cash Flow from Investing Activities:

Proceeds from Sale of Machinery 6,000

Purchase of Tangible Assets (10,70,000 - 8,50,000) 2,20,000

Net cash used in investing activities (2,14,000)

Cash Flow from Financing Activities:

Proceeds from Share Capital 2,00,000

Repayment of Long-term Borrowings (2,40,000 - 1,70,000) 70,000

Net cash generated from financing activities 1,30,000

Net increase in cash and cash equivalents 2,81,000

Cash and cash equivalents at the beginning of the year 3,20,000

Cash and cash equivalents at the end of the year 6,01,000

2) Cash Flow Statement for the year ended 31st March, 2019

Cash Flow from Operating Activities:

Net Profit for the year 1,50,000

Add: Depreciation 2,40,000

Loss on Sale of Machinery (80,000 - 50,000) 30,000

Increase in Trade Payables (1,00,000 - 1,10,000) (10,000)

Decrease in Trade Receivables (2,00,000 - 1,50,000) 50,000

Decrease in Inventories (1,80,000 - 1,00,000) 80,000

Increase in Short-term Provisions (95,000 - 80,000) 15,000

Cash generated from operations 3,55,000

Net cash generated from operating activities 3,55,000

Cash Flow from Investing Activities:

Proceeds from Sale of Machinery 30,000

Purchase of Tangible Assets (10,10,000 - 9,00,000) 1,10,000

Purchase of Non-current Investments —

Net cash used in investing activities (80,000)

Cash Flow from Financing Activities:

Proceeds from Share Capital 5,00,000

Repayment of Long-term Borrowings (1,00,000 - 2,00,000) (1,00,000)

Net cash generated from financing activities 4,00,000

Net increase in cash and cash equivalents 6,75,000

Cash and cash equivalents at the beginning of the year 6,40,000

Cash and cash equivalents at the end of the year 13,15,000

* Additionally, the redemption of 9% debentures has been considered as a financing activity, but it's important to note that it is not a cash inflow, it's a cash outflow, so we have to subtract the redemption amount from the net cash generated from financing activities.

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