question_answer

From the balance sheet and information given below, prepare cash flow statement. Balance Sheet as at ???.

Particulars	31st March, 2017	31st March, 2018
EQUITY AND LIABILITIES
Creditors	32,000	35,200
A?s Loan	20,000	-
Loan from Bank	32,000	40,000
Capital	1,00,000	1,22,400
	1,84,000	1,22,400
ASSETS
Cash	8,000	5,600
Debtors	24,000	40,000
Stock	28,000	20,000
Land	32,000	40,000
Machinery	64,000	44,000
Building	28,000	48,000
	1,84,000	1,97,600

During the year, machine costing Rs. 8,000 (Accumulated Depreciation Rs. 2,400) was sold for Rs. 4,000. The provisions for depreciation against machinery as on 31st March, 2017 and 31st March, 2018 were Rs. 20,000 and Rs. 32,000 respectively. Net profit for the year amounting to Rs. 36,000.

Answer:

                                                            Cash Flow Statement                                                                         for the year ended 31st March, 2018

	Particulars		Amt (Rs.)
I.	Cash Flow from Operating Activities		36,000
	Net profit before tax and extraordinary items
	(+) Non-cash and Non-operating expenses	14,400
	Depreciation on Machinery	1,600	16,000
	Loss on sale of Machinery		52,000
	Operating profit before working capital changes
	(+) Increase in Current Liabilities and Decrease in Current Assets
	Creditors	3,200
	Stock	8,000	11,200
	(-) Decrease in Current Liabilities and Increase in Current Assets
	Debtors	(16,000)	(16,000)
	Cash Flow from Operating Activities		47,200
II.	Cash Flow from Investing Activities
	Proceeds from sale of Machinery	4,000
	Purchase of Land	(8,000)
	Purchase of Building	(20,000)
	Cash Used in Investing Activities		(24,000)
III.	Cash Flow from Financing Activities
	Payment of A?s Loan	(20,000)
	Loan from Bank	8,000
	Drawings	(13,600)
	Cash Used in Financing Activities		(25,600)
IV.	Net increase in Cash and Cash Equivalents (I + II + III)		(2,400)
	(+) Cash and Cash Equivalent in the beginning of the year		8,000
V.	Cash and Cash Equivalent at the end of the year		5,600

            Working Notes 1. Dr                                                                 Machinery Account                                                      Cr

Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To Balance b/d	84,000	By Bank (Sale)	4,000
(64,000 + 20,000)		By Provision for Depreciation	2,400
		By Profit and Loss (Loss on Sale)	1,600
		By Balance c/d	76,000
		(44,000 + 32,000)
	84,000		84,000

2. Dr                                                     Provision for Depreciation Account                                         Cr

Particulars	Amt (Rs.)	Particulars	Amt (Rs.)
To Machinery A/c	2,400	By Balance b/d	20,000
To Balance c/d	32,000	By Deprecation A/c	14,400
	34,000		34,400

3.

Calculation of Drawings	Amt (Rs.)
Capital at the beginning	1,00,000
(+) Net Profit	36,000
	1,36,000
(-) Capital at the end	(1,22,400)
Drawings	13,600