Question 59 Chapter 8 -Unimax Publication Class 12 Part 2 - 2021

Question 59 Chapter 8 – Unimax Publication Class 12 Part 2 – 2021

Table of Contents

59 From the following information, prepare a Cash Flow Statement:

BALANCE SHEETS AS AT…….

Particulars	31.3.2022	31.3.2021
I. Equity and liabilities
(1) Shareholders’ funds
(a) Share capital	1,00,000
(b) General reserve	4,000	4,000
Profit & loss account
(2) Non-current liabilities:
15% debentures	14,000	12,000
(3) Current liabilities
(a) Cash credit	13,600	34,000
(b) Trade payable	31,600	34,000
(c) Short term provisions (provision for tax)	8,400	6,000
(d) Dividend payables	2,000	–
Total	1,76,000	1,63,000
II. Assets:
(1) Non-current assets:
Fixed assets	80,000	82,000
Less: accumulated Dep.	30,000	22,000
	50,000	60,000
(2) Current assets:
(a) Inventories	70,000	60,000
(b) Sundries debtors	48,000	40,000
(c) Prepaid expenses	1,000	600
(d) Current investment	5,000	2,000
Cash in hand	2,000	400
Total	1,76,000	1,63,000

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Additional Information:

(A) Contingent liability	31.3.2022	31.3.2021
Proposed dividend	11,600	10,000
(B) Provision for tax made 9,400.
(C) Fixed assets sold for 10,000 their cost 20,000 and accumulated depreciation till date of sale is 6,000.
(D) An interim dividend paid during the year 9,000.

The solution of Question 59 Chapter 8 – Unimax Publication Class 12 Part 2-2021 : –

CASH FLOW STATEMENT
FOR THE YEAR ENDED 31st MARCH . 2022

Particulars	₹	₹
I. cash flow from operating activities
Net profit before tax (note 1)	28,800
Adjustments for non-cash and non-operating items:
Add: depreciation 14,000
Loss on sale of fixed assets 4000
Interest on debentures 1,800	19,800
Operating profit before working capital change	48,600
Less: increase in current assets
Inventories
Trade receivables 8,000
Prepaid expenses 400
Decrease in current liabilities:
Trade payable 2,400	(20,800)
Cash generated from operating activities	27,800
Less: income tax paid	(7,000)
Net cash from operating activities	20,800	20,800
B. cash flow from investing activities
Sale of fixed assets	10,000
Purchase of fixed assets	(18000)
Not cash used in investing activities	(8000)	(8000)
C. cash flows from financing activities
Issue of share capital	20,000
Issue of debenture	2,000
Interest on debenture	(1800)
Decrease in cash credit	(11,400)
Payment of proposed dividend (for 2021)
(10,000-dividend payable 2,000)	(8000)
Interim dividend paid	(9000)
Net cash used in financing activities	(8200)	(8200)
Net increase in cash and cash equivalents		4600
Add: cash and cash equivalents in the beginning of the period		2400
Cash and cash equivalents at the end of the period		7,000

Working Notes:

1. Calculation of net profit before tax:	Amounts
Profit & loss a/c 31st march, 2022	2,400
Less: profit & loss account 31st march, 2021	2,000
	400
Add: proposed dividend	10,000
Interim dividend paid	9,000
Provision for tax made during the current year	9,400
	28,800

2. It is assumed that new debentures have been issued at the end of current accounting period. Hence interest on debentures is 15% on 12,000.

. Fixed asset account (On Original Cost)

Particulars	₹	Particulars	₹
To Balance b/d	82,000	By Bank (sale)	10,000
To Bank (balancing figures, being purchase)	18,000	By Accumulated depreciation a/c	6,000
		(Being depreciation on fixed asset sold)
		By statements of P&L	6,000
		(Loss on sale of fixed assets)
		By Balance c/d	80,000
	1,00,000		1,00,000

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What is the cash flow statement? why do we need to prepare?

Chapter No. 1 – Company Accounts (Share Capital)
Chapter No. 2 – Company Accounts (Issue of Debentures)
Chapter No. 3 – Company Accounts (Redemption of Debentures)
Chapter No. 4 – Financial Statements of a Company
Chapter No. 5 – Financial Statement Analysis
Chapter No. 6 – Tools of Financial Statement Analysis- Comparative and Common Size
Chapter No. 7 – Ratio Analysis
Chapter No. 8 – Cash Flow Statement

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