Page 134 - MA12

M.40 Management Accounting (Section B)—ISC XII

B. Cash Flow from Investing Activities
Purchase of Machinery (WN 2) (3,40,000)
Purchase of Non-Current Investments (20,000)
Sale of Machinery (WN 2) 24,000
Cash Used in Investing Activities (3,36,000)
C. Cash Flow from Financing Activities
Proceeds from Issue of Equity Shares [` 1,00,000 + ` 15,000 (Premium)] 1,15,000
Proceeds from Issue of Debentures [` 1,00,000 – ` 10,000 (Discount)] 90,000
Interim Dividend Paid (25,000)
Interest on Debentures Paid (15,000)
Dividend Paid (48,000)
Cash Flow from Financing Activities 1,17,000
D. Net Increase in Cash and Bank Balances (A + B + C) 1,10,000
Add: Opening Balance of Cash and Bank Balances 1,40,000
E. Closing Balance of Cash and Bank Balances 2,50,000

Working Notes:
1. Calculation of Net Profit before Tax:
Particulars `
Surplus, i.e., Balance in Statement of Profit and Loss (Closing) 2,15,000
Less: Surplus, i.e., Balance in Statement of Profit and Loss (Opening) 1,70,000
Profit for the Year 45,000
Add: Transfer to General Reserve (` 1,00,000 – ` 80,000) 20,000
Interim Dividend Paid 25,000
Dividend Paid (Proposed Dividend for 2018–19) 48,000
Provision for Tax (2019–20) 30,000
Net Profit before Tax 1,68,000

2. Dr. MACHINERY ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 6,10,000 By Accumulated Depreciation A/c 70,000
To Bank A/c (Purchase) 3,40,000 By Bank A/c (Sale Proceeds)* 24,000
(Balancing Figure) By Loss on Sale of Machinery A/c 6,000
(Statement of Profit and Loss)
By Balance c/d 8,50,000
9,50,000 9,50,000
`
* Book value on the date of sale (` 1,00,000 – ` 70,000) 30,000
Less: Loss on Sale (20% of ` 30,000) 6,000
Sale Proceeds 24,000

3. Dr. ACCUMULATED DEPRECIATION ACCOUNT Cr.
Particulars ` Particulars `
To Machinery A/c 70,000 By Balance b/d 1,10,000
To Balance c/d 1,50,000 By Statement of Profit and Loss 1,10,000
(Depreciation Provided) (Balancing Figure)
2,20,000 2,20,000