Question 63 Chapter 5 of +2-B - USHA Publication 12 Class

Question 63 Chapter 5 of +2-B

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The solution of Question 63 Chapter 5 of +2-B: –

Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution

Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution

63. (CFS of a Sole Trader) The Balance Sheets of X and Y on 31st March were as follows :

Balance Sheets
Liabilities	2017 ₹	2018 ₹	Assets	2017 ₹	2018 ₹
Creditors	2,00,000	2,20,000	Building	1,75,000	3,00,000
Mrs. X’s Loan	1,25,000	–	Land	2,00,000	2,50,000
Bank Loan	2,00,000	2,50,000	Machinery	4,00,000	2,75,000
Capital	6,25,000	7,65,000	Stock	1,75,000	1,25,000
			Debtors	1,50,000	2,50,000
			Cash	50,000	35,000
	11,50,000	12,35,000		11,50,000	12,35,000

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During the year a machine costing ₹ 50,000 (accumulated depreciation ₹ 15,000) was sold for ₹ 25,000. The provision for depreciation against machinery as on 31st March 2017 and 31st March 2018 was ₹ 1,25,000 and ₹ 2,00,00 respectively.
Net Profit for the year amounted to ₹ 2,25,000. You are required to prepare cash flow statement.

The solution of Question 63 Chapter 5 of +2-B: –

Cash Flow Statement for the year ended 31st March 2018
Particulars		Rs
(A) Cash Flow from Operating Activities
Net Profit before Tax and Extraordinary Items*		2,25,000
Adjustment of non-Cash & Non-Operating Items
Add: Depreciation	90,000
Loss on sale of machinery	10,000	1,00,000
Cash operating Profit before Working Capital adj.		3,25,000
Add: Decrease in current Assets:
Stock	50,000
Add: Increase in current Liabilities:
Creditors	20,000
Less : Increase in current Assets:
Debtors	1,00,000	30,000
Cash flow from Operating Activities		2,95,000
(B) Cash flows from Investing Activities
Inflow of Cash
Sale of Machinery	25,000
Outflow of Cash
Purchase of Land	50,000
Purchase of Building	1,25,000	1,50,000
Net cash used in investing Activities		1,50,000
(C) Cash flows from Financing Activities
Inflow of Cash
Loan from Bank	50,000
Outflow of Cash
Repayment of Mrs. X’s Loan	1,25,000
Drawings	25,000	1,50,000
Net cash used in financing activities		1,50,000
Net Increase in Cash & Cash Equivalents (A + B + C)		15,000
Add: Cash & Cash equivalents in the beginning		50,000
Cash & Cash equivalents at the end		35,000

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Plant Account
Particulars	Amount ₹	Particulars	Amount ₹
To Balance b/d	5,25,000	By Depreciation	15,000
		By Cash A/c – Sale	25,000
		By Profit & Loss A/c – Loss	10,000
		By Balance c/d	4,75,000
	5,25,000		5,25,000

Provision for Depreciation Account
Particulars	Amount ₹	Particulars	Amount ₹
To Machinery A/c	15,000	By Balance b/d	1,25,000
To Balance c/d	2,00,000
		By Profit & Loss A/c – (Bal. fig.)	90,000
	2,15,000		2,15,000

Provision for Taxation Account
Particulars	Amount ₹	Particulars	Amount ₹
To Bank – Payment	35,000	By Balance b/d	40,000
To Balance c/d	50,000
		By Profit & Loss	45,000
	85,000		85,000