T.S. Grewal Class 12 Vol 3 Chapter 5 Q.51 - Cash Flow Statement

Additional Information:
1. Investments costing ₹24,000 were sold during the year for ₹25,500.
2. Provision for Tax made during the year was ₹27,000.
3. During the year, a part of the Fixed Assets costing ₹30,000 was sold for ₹36,000. The profit was included in the Statement of Profit and Loss.
4. The Interim Dividend paid during the year amounted to ₹1,20,000.
You are required to prepare a Cash Flow Statement.

Solution

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

A. Cash Flow from Operating Activities
Particulars	Amount (₹)	Amount (₹)
Profit as per Statement of Profit and Loss (2,04,000 − 1,68,000)	36,000
Add: Transfer to General Reserve (9,30,000 − 9,00,000)	30,000
Add: Interim Dividend	1,20,000
Add: Provision for Taxation	27,000
Profit Before Taxation		2,13,000
Items to be Added:
Depreciation (WN1)	2,10,000
Items to be Deducted:
Profit on Sale of Investments (WN2)	(1,500)
Profit on Sale of Fixed Assets (WN1)	(6,000)	2,02,500
Operating Profit before Working Capital Changes		4,15,500
Less: Increase in Trade Receivables (13,65,000 − 6,30,000)		(7,35,000)
Less: Decrease in Trade Payables (5,04,000 − 4,02,000)		(1,02,000)
Add: Decrease in Inventories (6,99,000 − 6,09,000)		90,000
Cash Generated from Operations		(3,31,500)
Less: Tax Paid (WN3)		(2,22,000)
Net Cash Used in Operating Activities		(5,53,500)
B. Cash Flow from Investing Activities
Sale of Investments (WN2)	25,500
Sale of Fixed Assets (WN1)	36,000
Purchase of Investments (WN2)	(54,000)
Net Cash Flow from Investing Activities		7,500
C. Cash Flow from Financing Activities
Proceeds from Issue of 10% Mortgage Loan	8,10,000
Interim Dividend Paid	(1,20,000)
Net Cash Flow from Financing Activities		6,90,000
D. Net Increase in Cash and Cash Equivalents (A + B + C)
Net Increase in Cash and Cash Equivalents		1,44,000
Add: Cash and Cash Equivalents at the beginning of the period		4,47,000
Cash and Cash Equivalents at the end of the period		5,91,000

Note: No new Fixed Assets were purchased this year — the Fixed Assets Account (WN1) balances fully using only the opening balance, the profit on sale, depreciation, and sale proceeds, so Investing Activities shows no Purchase of Fixed Assets line.

Working Note 1: Fixed Assets Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	12,00,000	By Bank A/c (Sale)	36,000
To Statement of Profit and Loss (Profit on Sale)	6,000	By Depreciation A/c (balancing figure)	2,10,000
		By Balance c/d	9,60,000
Total	12,06,000	Total	12,06,000

Working Note 2: Investments Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Balance b/d	1,50,000	By Bank A/c (Sale)	25,500
To Statement of Profit and Loss (Profit on Sale)	1,500	By Balance c/d	1,80,000
To Bank A/c (Purchase, balancing figure)	54,000
Total	2,05,500	Total	2,05,500

Working Note 3: Provision for Taxation Account

Particulars	Amount (₹)	Particulars	Amount (₹)
To Bank A/c (Tax Paid, balancing figure)	2,22,000	By Balance b/d	2,25,000
To Balance c/d	30,000	By Statement of Profit and Loss	27,000
Total	2,52,000	Total	2,52,000