Question 51 Chapter 5 of +2-B - USHA Publication 12 Class

Particulars	2017-18 ₹	2016-17 ₹
1. Reserves and Surplus
Surplus (Balance in Statement of Profit and Loss)	3,00,000	2,00,000
2. Tangible Assets
Machinery	12,70,000	10,00,000
(-) Accumulated Depreciation	(2,00,000)	(1,50,000)
	10,70,000	8,50,000
3. Intangible Assets
Goodwill	40,000	1,12,000

Additional Information
During the year a piece of machinery, costing ₹ 24,000 on which accumulated depreciation was ₹ 16,000 was sold for ₹ 6,000
Prepare cash flow statement.

The solution of Question 51 Chapter 5 of +2-B: - 

Cash Flow Statement

Particulars		Rs
(A) Cash Flow from Operating Activities
Net Profit before tax	1,00,000
Adjustments of Non cash or Non-Operating Items :
Add: Goodwill written off	72,000
Depreciation on Machinery	66,000
Loss on sale of Machinery	2,000	2,40,000
Cash operating Profit before Working Capital adj.		2,40,000
Less: Increase in current Assets:
Inventories	8,000
Trade Receivable	27,000
Less: Decrease in current Liabilities:
Trade Payable	25,000
Short Term Provisions	27,000	87,000
Cash flow from Operating Activities		1,53,000
(B) Cash flows from Investing Activities
Outflow of Cash
Sale of Machinery	6,000
Outflow of Cash
Purchase of Machinery	2,94,000	2,88,000
Net cash flow from investing Activities		2,88,000
(C) Cash flows from Financing Activities
Inflow of Cash
Share Capital Issued	1,00,000
Borrowing Raised	70,000	1,70,000
Net cash flow from financing activities		1,70,000
Net decrease in cash & Cash equivalents (A + B + C)		35,000
Add: Cash equivalent in the beginning of year	3,75,000
Current Investments	1,50,000	5,25,000
Cash equivalent at the end of year		5,60,000

Working Note

Plant and Machinery Account

Particulars	Amount ₹	Particulars	Amount ₹
To Balance b/d	10,00,000	By Depreciation	50,000
		By Bank A/c – Sale	6,000
		By Profit & Loss A/c – Loss on sale	2,000
To Bank –Purchase (Bal. fig.)	2,94,000	By Balance c/d	12,70,000
	12,94,000		12,94,000

Accumulated Depreciation Account

Particulars	Amount ₹	Particulars	Amount ₹
To Machinery A/c	16,000	By Depreciation	1,50,000
To Balance c/d	2,00,000	By Profit & Loss A/c – (Bal. fig.)	66,000
	2,16,000		2,16,000