Question 29 Chapter 5 of +2-B - T.S. Grewal 12 Class

Question 29 Chapter 5 of +2-B

Table of Contents

The solution of Question 29 Chapter 4 of +2-B: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

29. Calculate Cash Flow from Investing Activities from the following information:

Particulars	31st March,	31st March,
	2019 Rs	2018 Rs
Investment in Land	3,00,000	3,00,000
Shares in Damodar Ltd.	1,50,000	1,50,000
12% Long-term Investments	80,000	50,000
Plant and Machinery	7,50,000	6,00,000
Patents	70,000	1,00,000
Goodwill	1,50,000	1,00,000

Additional Information:
1. A piece of land was purchased as an investment out of surplus. It was let out for commercial
purpose and the rent received was Rs 20,000.
2. Dividend received from Damodar Ltd. @ 12%.
3. Patents written off to the extent of Rs 20,000. Some patents were sold at a profit of Rs 10,000.
4. A machine costing Rs 80,000 (depreciation provided thereon Rs 30, 000) was sold for 35,000.
Depreciation charged during the year was Rs 70,000.
5. During the year 12% investments were purchased for Rs 1,00,000 and some investments
were sold at a profit of Rs 10,000. Interest on investments for the year was duly received.

The solution of Question 29 Chapter 4 of +2-B: –

Cash Flow From for the year ended 31st March, 2019
Particulars		Rs
I. Cash Flow from Investing Activities
Rent Received	20,000
Dividend Received	18,000
Sale of Plant and Machinery (WN 1)	35,000
Sale of Investment (WN 2)	80,000
Interest on Investments*	6,000
Sale of Patents (WN 3)	20,000
Less: Purchase of Plant and Machinery	2,70,000
Less: Purchase of Investment	1,00,000
Less: Purchase of Goodwill	50,000	2,41,000
Net Cash Used in Investing Activities		2,41,000

*Interest on Investment:-

Interest on Investment	=	12%
	=	Rs 2,00,000 X 12%
	=	Rs 6,000

Plant and Machinery Account
Particulars	Rs	Particular	Rs
To Balance b/d	6,00,000	By Depreciation A/c	70,000
To Bank A/c (Purchase) (Bal. Fig.)	2,70,000	By Bank A/c (Sale)	35,000
		By Loss on Sale (Profit and Loss A/c)	15,000
		By Balance c/d	7,50,000
	8,70,000		8,70,000

Investments Account
Particulars	Rs	Particular	Rs
To Balance b/d	50,000	By Bank A/c (Sale)	80,000
To Bank A/c (Purchase) (Bal. Fig.)	1,00,000	By Balance c/d	80,000
To Profit on sale (Profit and Loss A/c)	10,000

	1,60,000		1,60,000

Investments Account
Particulars	Rs	Particular	Rs
To Balance b/d	1,00,000	By Profit & loss A/c (Written-off)	20,000
To Profit on sale (Profit and Loss A/c)	10,000	By Bank A/c (Sale) (Bal. fig.)	20,000
		By Balance c/d	70,000

	1,10,000		1,10,000