Question No 55 Chapter 8 – UNIMAX Class 12 Part 2 – 2021

Question No 55 Chapter 8 – UNIMAX Class 12 Part 2 – 2021

55. From the following particulars of Bharat Ltd., prepare a cash flow statement:

Particulars		₹	₹
Equity & liabilities
Shareholders’ funds
Equity share capital		7,20,000	9,50,000
18% pref. Share capital		4,00,000	2,00,000
Reserve & surplus
Profit and loss a/c		1,00,000	4,00,000
Reserves		1,20,000	1,40,000
Non-current liabilities
14% debentures		2,00,000	3,00,000
Current liabilities
Creditors		40,000	1,50,000
Bank Overdraft		60,000	50,000
Provision for tax		20,000	40,000
Provision for doubtful debts		20,000	30,000
Total		16,80,000	22,60,000
Assets
Non-current assets
Fixed assets		10,20,000	12,40,000
Non-current investment
10% investments (long-term)		60,000	1,60,000
Current assets
Debtors		80,000	1,50,000
Stock		3,80,000	3,70,000
Cash		1,20,000	3,30,000
Other current assets
Underwriting commission		5,000	6000
Discount on issue
Debentures		15,000	4000
Total		16,80,000	22,60,000

You are informed that during the year:

Proposed dividend 2021 1,20,000; 2022 1,50,000.

(a) A machine costing 1,40,000 (depreciation provided thereon 60,000) was sold for 50,000, depreciation charged during the year was 1,40,000.

(b) An interim dividend @ 15% was paid on equity shares. A new share was issued on 31.12.2022.

(c) Tax paid during the year was 10,000.

(d) On 31.12.2022 some investments were purchased for 1,80,000 and some, investments were sold at a profit of 20% on sale.

(e) Preference shares were redeemed on 31.12.2022 at a premium of 5%

The solution of Question 55 Chapter 8 - Unimax Publication Class 12 Part 2-2021: -

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31st DEC,2022

Particulars		₹	₹
Cash from operating activities:
Net profit as per balance sheet			3,00,000
Add: non-cash, non-operating expenses:
Discount on issue of debentures w/o		11,000
Depreciation charged		1,40,000
Loss on sale of machinery		30,000
Interim dividend paid		1,08,000
Provision for taxation		30,000
Premium paid on redemption of pref. shares		10,000
Preference share dividend paid		72,000
Transfer to reserve		20,000
Interest on debentures		28,000
Proposed dividend		1,20,000	5,69,000
Less: non-cash, non-operating incomes:
Interest received on investment		(6,000)
Profit on sale of investment		(16,000)	(22,000)
Add: decrease in current assets & increase in current liability:
Decrease in stock		10,000
Increase in creditors		1,10,000
Increase in provision for doubtful debts		10,000
Decrease in current liabilities &
Increase in current assets:
Increase in debtors		(70,000)	60,000
Less: income paid tax		(10,000)	(10,000)
Cash flow from operating activities			8,97,000
Cash from investing activities:
Purchase of investment		(1,80,000)
Purchase of machinery		(4,40,000)
Sale of machinery		50,000
Sale of investment		96,000
Interest received from investment		6,000
Cash flow from investing activities			(4,68,000)
Cash from financing activities:
Issue of equity share capital		2,30,000
Redemption of pref. share capital (2,00,000+10,000)		(2,10,000)
Issue of debenture		(99,000)
Underwriting commission		(1,08,000)
Interim dividend paid		(72,000)
Bank Overdraft		(10,000)
Interest on debentures		(28,000)
Proposed dividend paid		(1,20,000)
Cash flow from financial activity			(2,19,000)
Net increase			2,20,000
Add: opening cash & bank overdraft (1,20,000)			60,000
Closing cash & bank overdraft (3,30,000)			2,80,000

Working Notes:

MACHINERY  A/C

Particulars	₹	Particulars	₹
To Balance b/d	10,20,000	By Cash a/c (sale)	50,000
To Cash a/c (purchased) (B/F)	4,40,000	By Profit & loss a/c (loss)	30,000
		By Profit & loss a/c (Depreciation charged)	1,40,000
		By Balance c/d	12,40,000
	14,60,000		14,60,000

Provision for taxation A/C

Particulars	₹	Particulars	₹
To Cash a/c (tax paid)	10,000	By Balance b/d	20,000
To Balance c/d	40,000	By Profit & loss a/c (B/F)	30,000
(New provision)
	50,000		50,000

Investment A/c

Particulars	₹	Particulars	₹
To Balance b/d	60,000	By Cash a/c (sale)	96,000
To Profit & loss a/C	16,000	By Balance c/d	1,60,000
To Purchase	1,80,000
	2,56,000		2,56,000