Page 38 - MA12

Cash Flow Statement—Based on Accounting Standard-3 (Revised) 3.13
Solution: CASH FLOW STATEMENT for the year ended 31st March, 2019

Particulars ` `
I. Cash Flow from Operating Activities
Net Profit before Tax (WN 1) 20,000
Add: Non-cash and Non-operating Items:
Depreciation on Building 10,000
Depreciation on Plant 5,000
Interest on Debentures 7,200
Goodwill Amortised 5,000
Interest on Public Deposits 9,600
Operating Profit before Working Capital Changes 56,800
Add: Decrease in Current Assets and Increase in Current Liabilities:
Debtors 3,000
Accrued Income 4,000
Creditors 2,000
65,800
Less: Increase in Current Assets and Decrease in Current Liabilities:
Inventories 15,000
Bills Receivable 1,000
Prepaid Expenses 2,000
Bills Payable 2,000 20,000
Cash Flow from Operating Activities 45,800
II. Cash Flow from Investing Activities
Purchase of Building (WN 2) (80,000)
Purchase of Plant (WN 3) (25,000)
Cash Used in Investing Activities (1,05,000)
III. Cash Flow from Financing Activities
Proceeds from Issue of Share Capital 30,000
Proceeds from Issue of 12% Debentures 18,000
Proceeds from 12% Public Deposits 40,000
Decrease in Cash Credit (2,000)
Interest paid on Debentures (7,200)
Interest paid on Public Deposits (9,600)
Cash Flow from Financing Activities 69,200
IV. Net Increase in Cash and Bank Balances (I + II + III) 10,000
V. Cash and Bank Balances in the beginning of year 40,000
VI. Cash and Bank Balances at the end of the year (IV + V) 50,000

Working Notes:
1. Calculation of Net Profit before Tax: `
Closing Balance of Surplus, i.e., Balance in Statement of Profit and Loss 70,000
Less: Opening Balance of Surplus, i.e., Balance in Statement of Profit and Loss 50,000
Net Profit before Tax 20,000
2. Dr. BUILDING ACCOUNT Cr.
Particulars ` Particulars `
To Balance b/d 1,50,000 By Depreciation A/c 10,000
To Bank A/c (Balancing Figure: Purchase) 80,000 By Balance c/d 2,20,000
2,30,000 2,30,000