Page 42 - MA12

Cash Flow Statement—Based on Accounting Standard-3 (Revised) 3.17
Solution: Clay Ltd.
CASH FLOW STATEMENT for the year ended 31st March, 2020
Particulars ` `
I. Cash Flow from Operating Activities
Net Profit before Tax (WN 1) 4,30,000
Add: Non-cash and Non-Operating Expenses:
Intangible Fixed Assets Amortised (` 1,00,000 – ` 50,000) 50,000
Depreciation on Plant and Machinery (` 3,00,000 – ` 2,70,000) 30,000
Debentures Interest (` 4,00,000 × 10/100) 40,000
Interest on Bank Loan (10% of ` 50,000) 5,000
5,55,000
Less: Non-Operating Income:
Interest on Non-current Investments 6,000
Operating Profit before Working Capital Changes 5,49,000
Add: Increase in Current Liabilities and Decrease in Current Assets:
Trade Payables (Trade Creditors) 5,000
Inventories 10,000
Less: Increase in Current Assets and Decrease in Current Liabilities:
Trade Receivables (40,000)
Trade Payables (Bills Payable) (30,000)
Cash Generated from Operations 4,94,000
Less: Tax paid (60,000)
Cash Flow from Operating Activities 4,34,000
II. Cash Flow from Investing Activities
Proceeds from Sale of Building (` 4,00,000 – ` 2,50,000) 1,50,000
Purchase of 10% Investments (WN 4) (1,60,000)
Sale of 10% Investments 55,000
Interest on 10% Investments 6,000
Cash Flow from Investing Activities 51,000
III. Cash Flow from Financing Activities
Proceeds from Issue of Shares 3,00,000
Payment of Interim Dividend (50,000)
Final Dividend Paid (` 1,15,000 – ` 20,000) (95,000)
Redemption of 10% Debentures (1,00,000)
Interest on Debentures (` 40,000 – ` 10,000) (30,000)
Share Issue Expenses paid (40,000)
Proceeds from Bank Loan 50,000
Interest on Bank Loan (5,000)
Cash Flow from Financing Activities 30,000
IV. Net Increase in Cash and Bank Balances (I + II + III) 5,15,000
V. Add: Opening Balance of Cash and Bank Balances 3,95,000
VI. Cash and Bank Balances at the end (IV + V) 9,10,000

Working Notes:
1. Calculation of Net Profit before Tax: `
Closing Balance of Surplus, i.e., Balance in Statement of Profit and Loss 3,15,000
Less: Opening Balance of Surplus, i.e., Balance in Statement of Profit and Loss 1,25,000
1,90,000
Add: Provision for Tax made during the Current Year (WN 2) 75,000
Dividend Paid for the Current Year (Proposed Dividend for 2018–19) 1,15,000
Interim Dividend 50,000
Net Profit before Tax 4,30,000