Page 40 - MA12

Cash Flow Statement—Based on Accounting Standard-3 (Revised) 3.15
Additional Information:
1. Depreciation for the year was ` 1,10,000.
2. Bad Debts written off amounted to ` 15,000.
3. Income included excess provision written back ` 5,000.
4. Dividend received on investments was ` 5,000.
Solution: Calculation of Operating Profit before Working Capital Changes

Particulars `
Net Profit before Tax (Note) 6,35,000
Add: Non-cash Expenses:
(a) Depreciation 1,10,000
(b) Bad Debts 15,000 1,25,000
7,60,000
Less: Non-cash Income:
Excess Provision written back 5,000
7,55,000
Less: Non-operating Income (Dividend) 5,000
Operating Profit before Working Capital Changes 7,50,000
Note:
Net Profit before Tax
Net Profit for the year (Difference between Closing and Opening Surplus, i.e., `
Balance in Statement of Profit and Loss) (` 2,40,000 – ` 90,000) 1,50,000
Add: Transfer to General Reserve (` 1,50,000 – ` 75,000) 75,000
Investments Fluctuation Reserve (` 1,00,000 – ` 40,000) 60,000
Proposed Dividend (Previous Year) 1,00,000
Provision for Tax (Current Year) 2,50,000
Net Profit before Tax 6,35,000

Master Questions and Advanced Level Questions

Illustration 10.
From the following Balance Sheet of Clay Ltd., prepare Cash Flow Statement:

BALANCE SHEET as at 31st March, 2020
Particulars Note No. 31st March, 31st March,
2020 (`) 2019 (`)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 8,00,000 5,00,000
(b) Reserves and Surplus 1 3,50,000 2,05,000
2. Non-Current Liabilities
Long-term Borrowings (10% Debentures) 4,00,000 5,00,000
3. Current Liabilities
(a) Short-term Borrowings (10% Bank Loan) 50,000 ...
(b) Trade Payables 2 75,000 1,00,000
(c) Other Current Liabilities 3 30,000 ...
(d) Short-term Provisions 4 65,000 50,000
Total 17,70,000 13,55,000