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Question 56 Chapter 5 of +2-B
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Table of Contents
56. From the following Balance Sheet and information of Sun Ltd., prepare Cash Flow Statement:
| Particulars | Note No. | 31st March, | 31st March, |
| 2019 Rs | 2018 Rs | ||
| 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 | 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 |
Notes to Accounts
| Particulars | 31st March, 2019 ( Rs) | 31st March, 2018 ( Rs) |
| 1. 1. Share Capital | ||
| Equity Share Capital | 5,00,000 | 3,00,000 |
| 10% Preference Share Capital | 2,00,000 | 3,00,000 |
| 7,00,000 | 6,00,000 | |
| 2. Reserves and Surplus | ||
| Securities Premium Reserve | 10,000 | —- |
| Surplus i.e., Balance in Statement of Profit and Loss | 4,00,000 | 2,00,000 |
| 4,10,000 | 2,00,000 | |
| 3. Trade Receivables | ||
| Sundry Debtors | 3,00,000 | 2,00,000 |
| Less: Provision for Doubtful Debts | 20,000 | 10,000 |
| 2,80,000 | 1,90,000 |
You are informed that during the year:
| (i) Proposed Dividend | 31st March, | 31st March, |
| 2019 Rs | 2018 Rs | |
| Equity Share Capita | Nil | Nil |
| Preference Share Capital | 10% | 10% |
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(ii) A machine with a book value of Rs 90,000 was sold for Rs 50,000;
(iii) Depreciation charged during the year Rs 60,000;
(iv) Debentures were issued on 1st April, 2018;
(v) Investments were purchased on 31st March, 2019;
(vi) Preference shares were redeemed on 31st December,2018;
(vii) An interim dividend @ 15% was paid on equity shares on 31st December, 2018;
(viii) Fresh equity shares were issued at a premium of 5% on 31st March, 2019.
The solution of Question 56 Chapter 4 of +2-B: –
Cash Flow Statement for the year ended 31st March,2019 | ||
| Particulars | Rs | |
| I. Cash Flow from Financing Activities | ||
| Profit as per Statement of Profit and Loss : | ||
| Closing Balance of Profit & Loss | 4,00,000 | |
| Less: Opening Balance of Profit & Loss | 2,00,000 | |
| Provision for Tax | 30,000 | 2,30,000 |
| Net Profit before tax and extraordinary items | 2,30,000 | |
| Items to be Added: | ||
| Depreciation on Fixed Assets | 60,000 | |
| Loss on Fixed Assets | 40,000 | |
| Interest on Debentures | 30,000 | |
| Dividend on Equity Shares | 45,000 | |
| Provision for Doubtful Debts | 10,000 | |
| Items to be Deducted: | ||
| Interest on Investment | 10,000 | 1,75,000 |
| Operating Profit before Working Capital Adjustments | 4,05,000 | |
| Less: Increase in Current Assets | ||
| Trade Payables | 1,00,000 | |
| Inventories | 1,00,000 | 2,00,000 |
| Add: Decrease in Current Assets | ||
| Trade Receivables | 80,000 | 80,000 |
| Cash Generated from Operations | 2,85,000 | |
| Less: Tax Paid (WN 3) | … | |
| Net Cash Flow from Operating Activities | 2,85,000 | |
| II. Cash Flow from Financing Activities | ||
| Sale of Fixed Assets | 50,000 | |
| Purchase of Fixed Assets (WN) | 2,50,000 | |
| Purchase of Investment | 1,00,000 | |
| Interest on Investment | 10,000 | 2,90,000 |
| Net Cash Used in Investing Activities | 2,90,000 | |
| III: Cash Flow from Financing Activities | ||
| Proceeds from Issue of Equity Shares | 2,00,000 | |
| Proceeds from Issue of issue of Debentures | 1,00,000 | |
| Interest on Debentures Paid | 30,000 | |
| Redemption of Preference Share Capital | 1,00,000 | |
| Security Premium Reserve | 10,000 | |
| Dividend Paid on Preference Share Capital | 30,000 | |
| Dividend Paid on Equity Share Capital | 45,000 | 1,05,000 |
| Net Cash Flow from Financing Activities | 1,05,000 | |
| IV. Net Decrease in Cash and Cash Equivalents | 1,00,000 | |
| Add: Cash and Cash Equivalents in the beginning of the period | 70,000 | |
| Cash and Cash Equivalents at the end of the period | 1,70,000 | |
| Fixed Assets Account | |||
| Particulars | Rs | Particular | Rs |
| To Balance b/d | 6,00,000 | By Bank A/c (Sale) | 50,000 |
| To Bank A/c (Purchases – Bal. Fig.) | 2,50,000 | By Depreciation A/c | 60,000 |
| By Loss on Sale (Profit and Loss A/c) | 40,000 | ||
| By Balance c/d | 7,00,000 | ||
| 8,50,000 | 8,50,000 | ||
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Also, Check out the solved question of previous Chapters: –
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- 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
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