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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Following is the Balance Sheet of Akash Ltd. as at 31st March, 2025. Prepare a Cash Flow Statement:
Balance Sheet of Akash Ltd. as at 31st March, 2025
| Particulars | 31st March, 2025 (₹) | 31st March, 2024 (₹) |
|---|---|---|
| I. EQUITY AND LIABILITIES | ||
| 1. Shareholders’ Funds | ||
| (a) Share Capital | 30,00,000 | 20,00,000 |
| (b) Reserves and Surplus — Surplus, i.e., Balance in Statement of Profit and Loss | (4,25,000) | (5,37,500) |
| 2. Non-Current Liabilities — Long-term Borrowings: 12% Debentures | 7,50,000 | 6,25,000 |
| 3. Current Liabilities — Trade Payables | 4,75,000 | 6,75,000 |
| Total | 38,00,000 | 27,62,500 |
| II. ASSETS | ||
| 1. Non-Current Assets | ||
| (a) Property, Plant and Equipment — Tangible Assets (Machinery) | 17,25,000 | 12,50,000 |
| (b) Non-Current Investments | 3,00,000 | 5,00,000 |
| 2. Current Assets | ||
| (a) Inventories | 10,00,000 | 7,50,000 |
| (b) Trade Receivables | 6,00,000 | 1,12,500 |
| (c) Cash and Cash Equivalents | 1,75,000 | 1,50,000 |
| Total | 38,00,000 | 27,62,500 |
Additional Information:
(i) Debentures were issued on 1st January, 2025.
(ii) Machinery costing ₹5,00,000, on which depreciation charged was ₹1,75,000, was sold for ₹3,75,000.
(iii) Depreciation charged during the year amounted to ₹2,00,000.
(iv) Non-Current Investments were sold at a profit of 20%.
Prepare a Cash Flow Statement.
Akash Ltd. 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 ((4,25,000) − (5,37,500)) | 1,12,500 | |
| Add: Depreciation on Machinery | 2,00,000 | |
| Add: Interest on Debentures (WN2) | 78,750 | 2,78,750 |
| 3,91,250 | ||
| Less: Profit on Sale of Machinery (3,75,000 − 3,25,000) | (50,000) | |
| Less: Profit on Sale of Non-Current Investment (20% of 2,00,000) | (40,000) | (90,000) |
| Operating Profit before Working Capital Changes | 3,01,250 | |
| Less: Decrease in Trade Payables (6,75,000 − 4,75,000) | (2,00,000) | |
| Less: Increase in Inventories (10,00,000 − 7,50,000) | (2,50,000) | |
| Less: Increase in Trade Receivables (6,00,000 − 1,12,500) | (4,87,500) | (9,37,500) |
| Cash Used in Operating Activities | (6,36,250) | |
| II. Cash Flow from Investing Activities | ||
| Proceeds from Sale of Machinery | 3,75,000 | |
| Proceeds from Sale of Non-Current Investment (WN1) | 2,40,000 | 6,15,000 |
| Payment for Purchase of Machinery (WN3) | (10,00,000) | |
| Cash Used in Investing Activities | (3,85,000) | |
| III. Cash Flow from Financing Activities | ||
| Issue of Shares (30,00,000 − 20,00,000) | 10,00,000 | |
| Issue of Debentures (7,50,000 − 6,25,000) | 1,25,000 | 11,25,000 |
| Payment of Interest on Debentures | (78,750) | |
| Cash Flow from Financing Activities | 10,46,250 | |
| Net Increase in Cash and Cash Equivalents | 25,000 | |
| Add: Opening Cash and Cash Equivalents | 1,50,000 | |
| Closing Cash and Cash Equivalents | 1,75,000 | |
Working Note 1: Non-Current Investments decreased by ₹2,00,000 (5,00,000 − 3,00,000), the book value of the investments sold; sold at 20% profit, sale proceeds = 2,00,000 × 1.20 = ₹2,40,000; profit = ₹40,000.
Working Note 2: Interest on Debentures
| Interest on pre-existing Debentures (12% of 6,25,000, full year) | 75,000 |
| Interest on new Debentures issued 1st January, 2025 (12% of 1,25,000 for 3 months) | 3,750 |
| Total Interest on Debentures | 78,750 |
Working Note 3: Machinery Account
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Balance b/d | 12,50,000 | By Bank A/c (Sale) | 3,75,000 |
| To Statement of Profit and Loss (Profit on Sale, 3,75,000 − 3,25,000) | 50,000 | By Statement of Profit and Loss (Depreciation) | 2,00,000 |
| To Bank A/c (Purchase, balancing figure) | 10,00,000 | By Balance c/d | 17,25,000 |
| Total | 23,00,000 | Total | 23,00,000 |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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