T.S. Grewal Class 12 Vol 3 Chapter 5 Q.20 - Cash Flow Statement

Question 20

Following is the Balance Sheet of Bharat Gas Ltd. as at 31st March, 2023:

Balance Sheet as at 31st March, 2023

Particulars	Note No.	31st March, 2023 (₹)	31st March, 2022 (₹)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital		14,00,000	10,00,000
(b) Reserves and Surplus	1	5,00,000	4,00,000
2. Non-Current Liabilities
(a) Long-term Borrowings		5,00,000	1,40,000
3. Current Liabilities
(a) Trade Payables		1,00,000	60,000
(b) Short-term Provisions	2	80,000	60,000
Total		25,80,000	16,60,000
II. ASSETS
1. Non-Current Assets
(a) (i) Tangible Assets (Property, Plant and Equipment)	3	16,00,000	9,00,000
(a) (ii) Intangible Assets	4	1,40,000	2,00,000
2. Current Assets
(a) Inventories		2,50,000	2,00,000
(b) Trade Receivables		5,00,000	3,00,000
(c) Cash and Cash Equivalents		90,000	60,000
Total		25,80,000	16,60,000

Notes to Accounts:

	Particulars	31st March, 2023 (₹)	31st March, 2022 (₹)
1.	Reserves and Surplus — Balance in Statement of Profit and Loss	5,00,000	4,00,000
2.	Short-term Provisions — Provision for Taxation	80,000	60,000
3.	Tangible Assets — Machinery	18,50,000	10,00,000
	Less: Accumulated Depreciation	(2,50,000)	(1,00,000)
	Net Tangible Assets	16,00,000	9,00,000
4.	Intangible Assets — Goodwill	1,40,000	2,00,000

Adjustment: During the year, a machine costing ₹3,00,000, on which accumulated depreciation was ₹45,000, was sold for ₹1,35,000.

Calculate Cash Flow from Operating Activities. (CBSE 2024)

Solution

Cash Flow Statement (Indirect Method) A. Cash Flow from Operating Activities

Particulars	Amount (₹)	Amount (₹)
Balance in Statement of Profit and Loss (5,00,000 − 4,00,000)		1,00,000
Add: Provision for Tax		80,000
Profit before Tax and Extraordinary Items		1,80,000
Adjustments for:
Depreciation (Machinery)	1,95,000
Loss on Sale of Machine	1,20,000
Amortisation (Goodwill)	60,000	3,75,000
Operating Profit before Working Capital Changes		5,55,000
Working Capital Adjustments:
Add: Increase in Trade Payables		40,000
		5,95,000
Less: Increase in Inventories	(50,000)
Less: Increase in Trade Receivables	(2,00,000)	(2,50,000)
Cash Generated from Operations		3,45,000
Less: Income Tax Paid		(60,000)
Net Cash from Operating Activities		2,85,000

Working Note 1: Machine Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	10,00,000	By Accumulated Depreciation A/c	45,000
To Bank A/c (Purchase, balancing figure)	11,50,000	By Bank A/c (Sale)	1,35,000
		By Loss on Sale of Machine A/c	1,20,000
		By Balance c/d	18,50,000
Total	21,50,000	Total	21,50,000

Working Note 2: Accumulated Depreciation Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Machine A/c	45,000	By Balance b/d	1,00,000
To Balance c/d	2,50,000	By Depreciation A/c (provided during the year, balancing figure)	1,95,000
Total	2,95,000	Total	2,95,000