Question 55 Chapter 5 of +2-B - USHA Publication 12 Class

Question 55 Chapter 5 of +2-B

55. (CFS Showing Operating, Investing & Financing Activities) From the following balance sheet of Sewak Ltd. as on 31st March, 2017 and 2018. Prepare cash flow statement.

Particulars	Note No.	31st March 2017	31st March 2018
I. Equity and Liabilities
Shareholders Fund :
(a) Share Capital		4,00,000	7,00,000
(b) Reserves and Surplus (Balance in statement of profit and loss)		50,000	3,20,000
2. Non-current Liabilities
Long-term Borrowings (9% debentures)		2,00,000	4,00,000
3. Current Liabilities
(a) Trade Payables (Creditors)		1,10,000	1,50,000
(b) Other Current Liabilities (Expenses)		10,000	20,000
Total		6,70,000	9,50,000
II. Assets
1. Non-Current Assets :
(a) Fixed Assets		3,00,000	5,00,000
(b) Non —current Investments		2,00,000	1,40,000
2. Current Assets
(a) Inventories (Stock)		50,000	1,00,000
(b) Trade Receivables (Debtors)		1,00,000	1,70,000
(c) Cash and Cash Equivalents		20,000	40,000
Total		6,70,000	9,50,000

Additional Information
Included in fixed assets was a piece of machinery costing 70,000 on which depreciation charged was 40,000 and it was sold for Z 30,000. During the year, 1,40,000 depreciation was charged on fixed assets. Prepare the cash flow statement.

The solution of Question 55 Chapter 5 of +2-B: - 

Cash Flow Statement for the year ended 31st March 2016

Particulars		Rs
(A) Cash Flow from Operating Activities
Net Loss as per the statement of Profit and Loss A/c		2,70,000
Adjustment of Non-cash & Non-Operating items
Add: Depreciation on Fixed Assets	1,40,000
Interest on Debentures 6% on ₹ 2,00,000	18,000	1,58,000
Operating Loss before change in Working Capital		1,12,000
Add: Increase in Current Liabilities:
Creditors	40,000
Outstanding Expenses	10,000	50,000
Less: Increase in current Assets:
Inventories	50,000
Debtors	70,000	1,20,000
Cash used in Operating Activities		1,82,000
(B) Cash flows from Investing Activities
Inflow of Cash
Sale of Fixed Assets	30,000
Sale of Investment	60,000
Outflow of Cash
Purchase of Fixed Assets
Cash used in Investing Activities	3,70,000
Net cash used in investing Activities		2,80,000
(C) Cash flows from Financing Activities
Inflow of Cash
Issue of Equity Shares	3,00,000
Issue of 9% Debentures	2,00,000
Outflow of Cash
Interest paid on Debentures	18,000	4,82,000
Net cash flow from financing activities		4,82,000
Net decrease in cash & Cash equivalents (A + B + C)		20,000
Add: Cash equivalent at the beginning of the year		20,000
Cash equivalent at the end of year		40,000

Working Note

Fixed Assets Account

Particulars	Amount ₹	Particulars	Amount ₹
To Balance b/d	3,00,000	By Depreciation	1,40,000
		By Bank A/c –Sale	30,000
To Bank –Purchase (Bal. fig.)	3,70,000	By Balance c/d	5,00,000
	6,70,000		6,70,000