T.S. Grewal Class 12 Vol 3 Chapter 5 Q.48 - Cash Flow Statement

Question 48

Prepare a Cash Flow Statement of Sea Ltd. from the following information:

Balance Sheet as at 31st March, 2025

Particulars	31st March, 2025 (₹)	31st March, 2024 (₹)
I. EQUITY AND LIABILITIES
Shareholders’ Funds
(a) Share Capital	3,00,000	1,80,000
(b) Reserves and Surplus	(72,000)	30,000
Non-Current Liabilities — Long-term Borrowings (9% Debentures)	2,40,000	1,20,000
Current Liabilities
(a) Trade Payables	90,000	66,000
(b) Other Current Liabilities	12,000	6,000
Total	5,70,000	4,02,000
II. ASSETS
Non-Current Assets
(a) Property, Plant and Equipment	3,60,000	2,40,000
(b) Non-Current Investments	24,000	60,000
Current Assets
(a) Inventories	60,000	30,000
(b) Trade Receivables	1,02,000	60,000
(c) Cash and Cash Equivalents	24,000	12,000
Total	5,70,000	4,02,000

Notes to Accounts: Reserves and Surplus — General Reserve: 1,20,000 (2025), 60,000 (2024); Surplus, i.e., Balance in Statement of Profit and Loss: (1,92,000) (2025), (30,000) (2024); Total: (72,000) (2025), 30,000 (2024). Long-term Borrowings — 9% Debentures: 2,40,000 (2025), 1,20,000 (2024).

Additional Information:
Included in Property, Plant and Equipment was a piece of Machine costing ₹36,000, on which depreciation charged was ₹12,000, and it was sold for ₹12,000.
Depreciation charged during the year was ₹60,000.

Solution

Cash Flow Statement for the year ended 31st March, 2025

I. Cash Flow from Operating Activities
Particulars	Amount (₹)	Amount (₹)
Surplus, i.e., Balance in Statement of Profit and Loss ((1,92,000) − (30,000))	(1,62,000)
Add: Transfer to General Reserve (1,20,000 − 60,000)	60,000
Net Loss before Tax and Extraordinary Items		(1,02,000)
Add: Depreciation	60,000
Add: Loss on Sale of Machine (36,000 − 12,000 − 12,000)	12,000	72,000
Operating Loss before Working Capital Changes		(30,000)
Add: Increase in Trade Payables (90,000 − 66,000)	24,000
Add: Increase in Other Current Liabilities (12,000 − 6,000)	6,000
Less: Increase in Inventories (60,000 − 30,000)	(30,000)
Less: Increase in Trade Receivables (1,02,000 − 60,000)	(42,000)	(42,000)
Net Cash Used in Operating Activities		(72,000)
II. Cash Flow from Investing Activities
Purchase of Property, Plant and Equipment (WN)	(2,04,000)
Sale of Machine	12,000
Sale of Non-Current Investments, at book value (60,000 − 24,000)	36,000
Net Cash Used in Investing Activities		(1,56,000)
III. Cash Flow from Financing Activities
Issue of Share Capital (3,00,000 − 1,80,000)	1,20,000
Issue of 9% Debentures (2,40,000 − 1,20,000)	1,20,000
Net Cash Flow from Financing Activities		2,40,000
IV. Net Increase in Cash and Cash Equivalents (I + II + III)
Net Increase in Cash and Cash Equivalents		12,000
Add: Cash and Cash Equivalents at the beginning of the period		12,000
Cash and Cash Equivalents at the end of the period		24,000

Working Note: Property, Plant and Equipment (Net) Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	2,40,000	By Depreciation A/c	60,000
To Bank A/c (Purchase, balancing figure)	2,04,000	By Bank A/c (Sale)	12,000
		By Statement of Profit and Loss (Loss on Sale, 36,000 − 12,000 − 12,000)	12,000
		By Balance c/d	3,60,000
Total	4,44,000	Total	4,44,000