Taking into account the following additional information, you are required to prepare funds flow statement and statement of changes in working capital. (a) Dividend paid was Rs.6,000/- (b) Rs.3,600/- was written off as depreciation on plant and Rs.2,950/- on buildings. (c) Profit on sale of plant was Rs.3,000/-
Answers
Explanation:
MS-04 Accounting and Finance for Managers
Taking into account the following additional information, your are required to prepare funds flow statement and statement change in working capital.
Following are the balance sheets of a limited company as on 31st December, 2009 and 2010.
Liabilities
2009
Rs.
2010
Rs.
Assets
2009
Rs.
2010
Rs.
Share capital
Reserves
P & L account
Bank loan (Long-term)
Creditors
Bills payable
54,000
13,000
8,600
25,000
28,000
8,000
74,000
15,500
8,800
--
24,000
8,500
Goodwill
Buildings
Plant
Stock
Debtors
Cash
Bank
3,000
50,950
35,000
25,500
22,000
150
--
2,520
48,000
43,000
18,800
16,200
180
2,100
Total
1,36,600
1,30,800
1,36,600
1,30,800
Taking into account the following additional information, your are required to prepare funds flow statement and statement change in working capital.
(a) Dividend paid was Rs. 6,000.
(b) Rs. 3,600 was written off as depreciation on plant and Rs. 2,950 on buildings.
(c) Profit on sale of plant was Rs. 3,000.
Ans: Working Notes
Profit and loss adjustment account
To transfer to general reserve
(15500 – 13000)
2500
By bal b/d
8600
To Dividend
6000
By profit on sale of plant
3000
To goodwill write-off
(3000 -2520)
480
By funds from operation
12730
To Depreciation on plant
3600
To depreciation on buildings
2950
To Bal C/d
8800
Total
24330
24330
Plant account
To bal b/d
35000
By depreciation
3600
To profit on sale
3000
By bank (sales)
--
To bank (purchase)
8600
By bal c/d
43000
Total
46600
46600
Building account
To bal b/d
50950
By depreciation
2950
By bal c/d
49000
Total
50950
50950
Funds flow statement for the year 31st Dec 2010
Sources
Application
Issue of shares
(74000 – 54000)
20,000
Plant purchase
8600
Funds from operation
12,730
Dividend
6000
Long term loan repaid
25000
Decrease in working capital
6870
Total
39,600
39,600
Statements showing changes in working capital for the year 2010
2009
2010
Increase
Decrease
Current assets
Debts
22000
16200
--
6700
Stock
25500
18800
--
5800
Cash
150
180
30
--
Bank
--
2100
2100
--
Current liabilities
Creditors
28000
24000
4000
Bills payable
8000
8500
500
Total
6130
13000
Decrease in working capital = 6870