Question 57 Chapter 5 of +2-B - T.S. Grewal 12 Class

Question 57 Chapter 5 of +2-B

Table of Contents

The solution of Question 57 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)

57. From the following Balance Sheet and information of Volvo 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	2,25,000	2,50,000
(b) Reserves and Surplus	2	1,27,500	50,000
2. Non-Current Liabilities
Long-term Borrowings : 10% Debentures		1,00,000	50,000
3. Current Liabilities
(a) Trade Payables		72,500	35,000
(b) Other Current Liabilities−Premium on Redemption of Preference Shares		2,500	5,000
Total		5,27,500	3,90,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets – Tangible		3,10,000	2,55,000
(b) 10% Investments		45,000	15,000
2. Current Assets
(a) Current Investments		5,000	4,000
(b) Inventories		45,000	50,000
(c) Trade Receivables	3	92,500	45,000
(d) Cash and Cash Equivalents	4	35,000	21,000
Total		5,27,500	3,90,000

Notes to Accounts

Particulars	31st March, 2019 ( Rs)	31st March, 2018 ( Rs)
1. 1. Share Capital
Equity Share Capital	1,75,000	1,50,000
10% Preference Share Capital	50,000	1,00,000
	2,25,000	2,50,000
2. Reserves and Surplus
General Reserve	10,000	15,000
Surplus i.e., Balance in Statement of Profit and Loss	1,17,500	35,000
	1,27,500	50,000
3. Trade Receivables
Sundry Debtors	1,00,000	50,000
Less: Provision for Doubtful Debts	7,500	5,000
	92,500	45,000
4. Cash and Cash Equivalents
Cash in Hand	12,500	6,000
Cash in Bank	22,500	15,000
	35,000	21,000

Additional Information :
(i) You are informed during the year:

Proposed Dividend	31st March,	31st March,
	2019 Rs	2018 Rs
Equity Share Capital	Nil	Nil
Preference Share Capital	12%	12%

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(ii) A machine with a book value of Rs 20,000 was sold for Rs 12,500;
(iii) Depreciation charged during the year was Rs 35,000;
(iv) Preference shares were redeemed on 31st March, 2018 at a premium of 5%;
(v) An Interim dividend of Rs 5,000 was paid on equity shares on 31st March, 2019 out of General
Reserve;
(vi) Fresh equity shares were Issued on 31st March, 2019; and
(vii) Additional Investments were purchased on 31st March, 2019.

The solution of Question 57 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	1,17,500
Less: Opening Balance of Profit & Loss	35,000
Provision for Tax	12,000	94,500
Net Profit before tax and extraordinary items		94,500
Items to be Added:
Depreciation on Fixed Assets	35,000
Loss on Fixed Assets	7,500
Interest on Debentures	5,000
Provision for Doubtful Debts	2,500
Items to be Deducted:
Interest on Investment	1,500	48,500
Operating Profit before Working Capital Adjustments		1,43,000
Less: Increase in Current Assets
Trade Payables	50,000
Add: Decrease in Current Assets
Inventory	5,000
Add: Increase in Current Liabilities
Trade Payables	37,500	7,500
Cash Generated from Operations		1,35,500
Less: Tax Paid (WN 3)		…
Net Cash Flow from Operating Activities		1,35,500
II. Cash Flow from Financing Activities
Sale of Fixed Assets	12,500
Purchase of Fixed Assets (WN)	1,10,000
Purchase of Investment	25,000
Interest on Investment	1,500	1,21,000
Net Cash Used in Investing Activities		1,21,000
III: Cash Flow from Financing Activities
Proceeds from Issue of Equity Shares	25,000
Proceeds from Issue of issue of Debentures	50,000
Interest on Debentures Paid	5,000
Redemption of Preference Share Capital	50,000
Security Premium Reserve	2,500
Dividend Paid on Preference Share Capital	12,000
Dividend Paid on Equity Share Capital	5,000	500
Net Cash Flow from Financing Activities		500
IV. Net Decrease in Cash and Cash Equivalents		15,000
Add: Cash and Cash Equivalents in the beginning of the period		25,000
Cash and Cash Equivalents at the end of the period		40,000

Fixed Assets Account
Particulars	Rs	Particular	Rs
To Balance b/d	2,55,000	By Bank A/c (Sale)	12,500
To Bank A/c (Purchases – Bal. Fig.)	1,10,000	By Depreciation A/c	35,000
		By Loss on Sale (Profit and Loss A/c)	7,500
		By Balance c/d	3,10,000
	3,65,000		3,65,000