Question 38 Chapter 5 of +2-B - T.S. Grewal 12 Class

Question 38 Chapter 5 of +2-B

Table of Contents

Cash Flow from Financing Activities

38. From the following information, calculate Net Cash Flow from Operating Activities and Financing Activities:

Particulars	31st March, 2019 Rs	31st March, 2018 Rs
Equity Share Capital	13,75,000	11,25,000
5% Preference Share Capital	5,00,000	7,50,000
General Reserve	3,75,000	3,00,000
Surplus i.e., Balance in Statement of Profit and Loss	3,75,000	(3,50,000)
Securities Premium Reserve	25,000	—
Provision for Tax	1,00,000	50,000
Non-current Liabilities (8% Debenture)	6,50,000	3,75,000
Short-term Borrowings (8% Bank Loan)	1,00,000	1,25,000
Trade Payables	5,00,000	2,50,000
Trade Receivables and Inventories	13,00,000	11,50,000

Additional Information:

During the year additional debentures were issued at par on 1st October and Bank Loan was repaid on the same date.
Dividend on Equity Shares @ 8% was paid on Opening Balance.
Income tax Rs 1,12,500 has been provided during the year.
Preference shares were redeemed at par at the end of the year.

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Cash Flow From for the year ended 31st March, 2019
Particulars		Rs
I. Cash Flow from Financing Activities
Profit as per Statement of Profit and Loss		7,25,000
Items to be Added:
Dividend on Equity Shares	90,000
Dividend on Preference Shares	37,500
Interest on Debentures	41,000
Interest on Bank Loan	9,000
Provision for Tax	1,12,500
Transfer to General Reserve	75,000	3,65,000
Operating Profit before Working Capital Adjustments		10,90,000
Less: Increase in Current Assets
Trade Receivables & Inventories	1,50,000
Add: Increase in Current Liabilities
Trade Payables	2,50,000	1,00,000
Cash Generated from Operations		11,90,000
Less: Taxes Paid		62,500
Cash Flow from Operating Activities		11,27,500
II. Cash Flow from Financing Activities
Proceeds from Issue of Equity Shares	2,50,000
Proceeds from Issue of Debentures	2,75,000
Increase in Securities Premium Reserve	25,000	5,50,000
Less: Dividend on Equity Shares	90,000
Less: Dividend on Preference Shares	37,500
Less: Interest on Bank Loan*	9,000
Less: Interest on Debentures*	41,000
Less: Redemption of Preference Shares	2,50,000
Less: Repayment of Bank Loan	25,000	4,52,500
Cash Flows from Financing Activity		97,500

Total Interest	=	Rs 5,000 + Rs 4,000
	=	Rs 9,000

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Total Interest	=	Rs 30,000 + Rs 11,000
	=	Rs 41,000

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Also, Check out the solved question of previous Chapters: –

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Chapter No. 1 – Financial Statements of a Company
Chapter No. 2 – Financial Statement Analysis
Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
Chapter No. 4 – Accounting Ratios
Chapter No. 5 – Cash Flow Statement

Question 38 Chapter 5 of +2-B – T.S. Grewal 12 Class