question_answer

From the following balance sheet of SS Ltd, prepare cash flow statement. Balance Sheet As at 31st March, 2016 and 2017

	Particulars	Note No.	31st March, 2016 Amt (Rs.)	31st March, 2017 Amt (Rs.)
I.	EQUITY AND LIABILITIES
	1. Shareholders? Funds
	(a) Share Capital	1	8,00,000	10,00,000
	(b) Reserves and Surplus	2	60,000	74,000
	2. Non-current Liabilities
	15% Debentures		1,20,000	1,30,000
	3. Current Liabilities
	(a) Short-term Borrowings: Bank Overdraft		2,50,000	1,36,000
	(b) Trade Payables (Sundry creditors)		2,40,000	2,20,000
	(c) Short-term Provisions	3	1,60,000	2,00,000
	Total		16,30,000	17,60,000
II.	ASSETS
	1. Non-current Assets
	Fixed Assets	4	6,00,000	5,00,000
	2. Current Assets
	(a) Trade Receivables (Debtors)		4,00,000	4,80,000
	(b) Inventories (Stock)		6,00,000	7,00,000
	(c) Other Current Assets		6,000	10,000
	(d) Cash and Cash Equivalent		24,000	70,000
	Total		16,30,000	17,60,000

Notes to Accounts

	Particulars	2016 Amt (Rs.)	2017 Amt (Rs.)
1.	Share Capital
	Equity Share Capital	8,00,000	9,00,000
	12% Preference Share Capital	-	1,00,000
		8,00,000	10,00,000
2.	Reserves and Surplus
	Statement of Profit and Loss	20,000	24,000
	General Reserve	40,000	50,000
3.	Short-term Provisions
	Provision for Taxation	60,000	84,000
	Proposed Dividend	1,00,000	1,16,000
		1,60,000	2,00,000
4.	Fixed Assets (Tangible)
	Fixed Assets	8,20,000	8,00,000
	(-) Depreciation	(2,20,000)	(3,00,000)
		6,00,000	5,00,000

Additional Information

(i) Debenture Interest Paid Rs. 18,000.

(ii) Preference Shares were issued at the end of the year.

Answer:

Cash Flow Statement for the year ended at 31st March, 2017

	Particulars		Amt (Rs.)
I.	Cash Flow from Operating Activities
	Net Profit before Tax and Extraordinary Activities (W.N.)		2,14,000
	Adjustments for
	(+) Depreciation (3,00,000 ? 2,20,000)	80,000
	Interest Paid on Debentures	18,000	98,000
	Operating Profit before Working Capital Changes		3,12,000
	(-) Increase in Current Assets and Decrease in Current Liabilities
	Sundry Debtors	(80,000)
	Stock	(1,00,000)
	Other Current Assets	(4,000)
	Trade Payables	(20,000)	(2,04,000)
			1,08,000
	(-) Income Tax Paid		(60,000)
	Net Cash from Operating Activities		48,000
II.	Cash Flow from Investing Activities
	Sale of Fixed Assets	20,000
	Net Cash from Investing Activities		20,000
III.	Cash Flow from Financing Activities
	Issue of Equity Shares	1,00,000
	Issue of 12% Preference Shares	1,00,000
	Issue of 15% Debentures	10,000
	Debenture Interest  Paid	(18,000)
	Dividend Paid	(1,00,000)
	Net Cash used in Financing Activities		92,000
	Net Increase in Cash and cash Equivalent [I+II+III]		1,60,000
	(+) Cash and Cash Equivalent at the beginning (24,000-2,50,000)		(2,26,000)
	Cash and Cash Equivalent at the End (70,000 ? 1,36,000)		(66,000)

Note1. It has been assumed that the tax provided during the previous accounting year Rs. 60,000 has been paid during the current accounting year and the tax provided for 2015-16 is Rs. 84,000. 2. The Proposed dividend of the previous year, Rs. 1,00,000 has been paid in current accounting year and the current year?s proposed dividend is added back to the current year?s profits to arrive at cash from operating activities. Working Note Calculation of Net Profit before Tax and Extraordinary Activities

Particulars		Amt (Rs.)
Net Profit (24,000 ? 20,000)	4,000
(+) Transfer to General Reserve	10,000
Provision for Taxation	84,000
Proposed Dividend	1,16,000
		2,14,000