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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
From the following Balance Sheet and information of Sun Ltd., prepare a Cash Flow Statement:
| Particulars | Note No. | 31st March, 2025 (₹) | 31st March, 2024 (₹) |
|---|---|---|---|
| I. EQUITY AND LIABILITIES | |||
| 1. Shareholders’ Funds | |||
| (a) Share Capital | 1 | 7,00,000 | 6,00,000 |
| (b) Reserves and Surplus | 2 | 4,10,000 | 2,00,000 |
| 2. Non-Current Liabilities — Long-term Borrowings: 10% Debentures | 3,00,000 | 2,00,000 | |
| 3. Current Liabilities — Trade Payables | 1,40,000 | 60,000 | |
| Total | 15,50,000 | 10,60,000 | |
| II. ASSETS | |||
| 1. Non-Current Assets | |||
| (a) Fixed Assets — Tangible | 7,00,000 | 6,00,000 | |
| (b) 10% Investments (Non-Current) | 2,00,000 | 1,00,000 | |
| 2. Current Assets | |||
| (a) Current Investments | 90,000 | 50,000 | |
| (b) Inventories | 2,00,000 | 1,00,000 | |
| (c) Trade Receivables | 3 | 2,80,000 | 1,90,000 |
| (d) Cash and Cash Equivalents | 80,000 | 20,000 | |
| Total | 15,50,000 | 10,60,000 | |
Note 1: Share Capital — Equity Share Capital: 5,00,000/3,00,000; 10% Preference Share Capital: 2,00,000/3,00,000; Total: 7,00,000/6,00,000.
Note 2: Reserves and Surplus — Securities Premium Reserve: 10,000/Nil; Surplus: 4,00,000/2,00,000; Total: 4,10,000/2,00,000.
Note 3: Trade Receivables — Sundry Debtors: 3,00,000/2,00,000; Less: Provision for Doubtful Debts: 20,000/10,000; Net: 2,80,000/1,90,000.
You are informed that during the year:
(i) Proposed Dividend — Equity Share Capital: Nil (2025), Nil (2024); Preference Share Capital: 10% (2025), 10% (2024).
(ii) A machine with a book value of ₹90,000 was sold for ₹50,000.
(iii) Depreciation charged during the year ₹60,000.
(iv) Debentures were issued on 1st April, 2024.
(v) Investments were purchased on 31st March, 2025.
(vi) Preference shares were redeemed on 31st December, 2024.
(vii) An interim dividend @ 15% was paid on equity shares on 31st December, 2024.
(viii) Fresh equity shares were issued at a premium of 5% on 31st March, 2025.
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 (4,00,000 − 2,00,000) | 2,00,000 | |
| Add: Preference Dividend (WN1, 10% of 3,00,000) | 30,000 | |
| Profit Before Taxation | 2,30,000 | |
| Items to be Added: | ||
| Depreciation on Fixed Assets | 60,000 | |
| Loss on Fixed Assets (90,000 − 50,000) | 40,000 | |
| Interest on Debentures (10% of 3,00,000, issued at the start of the year) | 30,000 | |
| Dividend on Equity Shares (15% of 3,00,000, opening balance) | 45,000 | |
| Provision for Doubtful Debts (20,000 − 10,000) | 10,000 | |
| Items to be Deducted: | ||
| Interest on Investment (10% of 1,00,000, opening balance — new investment purchased on the last day) | (10,000) | 1,75,000 |
| Operating Profit before Working Capital Changes | 4,05,000 | |
| Less: Increase in Trade Receivables (Sundry Debtors, gross: 3,00,000 − 2,00,000) | (1,00,000) | |
| Less: Increase in Inventories (2,00,000 − 1,00,000) | (1,00,000) | |
| Add: Increase in Trade Payables (1,40,000 − 60,000) | 80,000 | (1,20,000) |
| Cash Generated from Operations | 2,85,000 | |
| Net Cash Flow from Operating Activities | 2,85,000 | |
| B. Cash Flow from Investing Activities | ||
| Sale of Fixed Assets | 50,000 | |
| Purchase of Fixed Assets (WN2) | (2,50,000) | |
| Purchase of Investment (2,00,000 − 1,00,000) | (1,00,000) | |
| Interest on Investment | 10,000 | |
| Net Cash Used in Investing Activities | (2,90,000) | |
| C. Cash Flow from Financing Activities | ||
| Proceeds from Issue of Share Capital (5,00,000 − 3,00,000) | 2,00,000 | |
| Proceeds from Issue of Debentures (3,00,000 − 2,00,000) | 1,00,000 | |
| Interest on Debentures Paid | (30,000) | |
| Redemption of Preference Share Capital (3,00,000 − 2,00,000) | (1,00,000) | |
| Securities Premium Reserve (5% of 2,00,000) | 10,000 | |
| Dividend Paid on Preference Share Capital | (30,000) | |
| Dividend Paid on Equity Share Capital | (45,000) | |
| Net Cash Flow from Financing Activities | 1,05,000 | |
| Net Increase in Cash and Cash Equivalents | 1,00,000 | |
| Add: Cash and Cash Equivalents at the beginning of the period (50,000 + 20,000) | 70,000 | |
| Cash and Cash Equivalents at the end of the period (90,000 + 80,000) | 1,70,000 | |
Working Note 1: Dividend on 10% Preference Shares has been calculated on the balance as at 31st March, 2024 (₹3,00,000), since the ₹1,00,000 of Preference Shares were only redeemed on 31st December, 2024, so the full year’s dividend is based on the opening balance.
Working Note 2: Fixed Assets Account
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Balance b/d | 6,00,000 | By Bank A/c (Sale) | 50,000 |
| To Bank A/c (Purchase, balancing figure) | 2,50,000 | By Depreciation A/c | 60,000 |
| By Statement of Profit and Loss (Loss on Sale) | 40,000 | ||
| By Balance c/d | 7,00,000 | ||
| Total | 8,50,000 | Total | 8,50,000 |
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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