Question 58 Chapter 5 of +2-B - T.S. Grewal 12 Class

Question 58 Chapter 5 of +2-B

Table of Contents

The solution of Question 58 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)

58. From the following Balance Sheet of Samta Ltd., as at 31st March, 2019, prepare Cash Flow Statement:

Particulars	Note No.	31st March, 2019 Rs	31st March, 2018 Rs
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital	1	7,50,000	7,50,000
(b) Reserves and Surplus	2	3,10,000	-20,000
2. Non-Current Liabilities
Long-term Borrowings (8% Debentures)		2,60,000	1,50,000
3. Current Liabilities
(a) Short-term Borrowings (8% Bank Loan)		40,000	50,000
(b) Trade Payables		1,20,000	1,10,000
(c) Short-term Provisions	3	50,000	40,000
Total		15,30,000	10,80,000
II. ASSETS
1. Non-Current Assets
(a) Fixed Assets		8,60,000	6,20,000
(i) Tangible Assets (Net)		15,000	40,000
(ii) Intangible Assets (Goodwill)		1,25,000	80,000
(b) Non-Current Investments
2. Current Assets
(a) Current Investments		5,000	15,000
(b) Inventories		1,95,000	1,00,000
(c) Trade Receivables		2,00,000	2,00,000
(d) Cash and Cash Equivalents		1,30,000	25,000
Total		15,30,000	10,80,000

Notes to Accounts

Particulars	31st March, 2019 ( Rs)	31st March, 2018 ( Rs)
1. Share Capital
Equity Share Capital	5,50,000	4,50,000
10% Preference Share Capital	2,00,000	3,00,000
	7,50,000	7,50,000
2. Reserves and Surplus
Securities Premium Reserve	10,000	—-
General Reserve	1,50,000	1,20,000
Surplus i.e., Balance in Statement of Profit and Loss	1,50,000	(1,40,000)
	3,10,000	-20,000
3. Short-term Provisions
Provision for Tax	50,000	40,000
	50,000	40,000

Additional Information :
(i) During the year a piece of machinery costing Rs 60,000 on which depreciation charged was 20,000 was sold at 50% of its book value. Depreciation provided on tangible Assets Rs 60,000;
(ii) Income tax Rs 45,000 was provided;
(iii) Additional Debentures were issued at par on 1st October, 2018 and Bank Loan was repaid on the same date;
(iv) At the end of the year Preference Shares were redeemed at a premium of 5%.

The solution of Question 58 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	1,50,000
Less: Opening Balance of Profit & Loss	1,40,000
Provision for Tax	45,000
General Reserve	30,000	3,65,000
Net Profit before tax and extraordinary items		3,65,000
Items to be Added:
Depreciation on Fixed Assets	60,000
Loss on sale of Fixed Assets	20,000
Interest on Debentures	16,400
Interest on Bank Loan	3,600
Premium on Redemption of Preference Shares	5,000
Goodwill written off	25,000	1,30,000
Operating Profit before Working Capital Adjustments		4,95,000
Less: Increase in Current Assets
Inventories	95,000
Add: Increase in Current Liabilities
Trade Payables	10,000	85,000
Cash Generated from Operations		4,10,000
Less: Tax Paid (WN 3)		35,000
Net Cash Flow from Operating Activities		3,75,000
II. Cash Flow from Financing Activities
Sale of Fixed Assets	20,000
Purchase of Fixed Assets (WN)	3,40,000
Purchase of Investment	45,000	3,65,000
Net Cash Used in Investing Activities		3,65,000
III: Cash Flow from Financing Activities
Proceeds from Issue of Equity Shares	1,00,000
Proceeds from Issue of Debentures	1,10,000
Interest on Debentures Paid	16,400
Redemption of Preference Share Capital	1,00,000
Premium on Redemption of Preference Share Capital	5,000
Security Premium Reserve	10,000
Repayment of Bank Loan	10,000
Interest on Bank Loan Paid	3,600	85,000
Net Cash Flow from Financing Activities		85,000
IV. Net Decrease in Cash and Cash Equivalents		95,000
Add: Cash and Cash Equivalents in the beginning of the period		40,000
Cash and Cash Equivalents at the end of the period		1,35,000

Fixed Assets Account
Particulars	Rs	Particular	Rs
To Balance b/d	6,20,000	By Bank A/c (Sale)	20,000
To Bank A/c (Purchases – Bal. Fig.)	3,40,000	By Depreciation A/c	60,000
		By Loss on Sale (Profit and Loss A/c)	20,000
		By Balance c/d	8,60,000
	9,60,000		9,60,000

Provision for Taxation Account
Particulars	Rs	Particular	Rs
To Bank A/c (Tax Paid) (Bal. Fig.)	35,000	By Balance b/d	40,000
To Balance c/d	50,000	By Profit and Loss A/c	45,000
	85,000		85,000