Page 262 - MA-12

3.18 Management Accounting (Section B)—ISC XII

Notes to Accounts
Particulars 31st March, 31st March,
2019 (`) 2018 (`)
1. Reserves and Surplus
General Reserve 2,00,000 1,50,000
Surplus, i.e., Balance in Statement of Profit and Loss 1,00,000 60,000
3,00,000 2,10,000

2. Short-term Provisions
Provision for Tax 1,00,000 70,000
3. Fixed Assets (Tangible)
Plant and Machinery 7,00,000 5,00,000
Land and Building 6,00,000 4,00,000
13,00,000 9,00,000

Additional Information:
1. Depreciation @ 25% was charged on the opening value of Plant and Machinery.
2. During the year one old machine costing ` 50,000 (WDV ` 20,000) was sold at a
profit of ` 15,000.
3. ` 50,000 was paid towards Income Tax during the year.
4. Building under construction was not subject to any depreciation.
5. Debentures were issued on 1st October, 2018 and Equity Shares were issued on
1st April, 2018.
Prepare Cash Flow Statement.

Solution: CASH FLOW STATEMENT
for the year ended 31st March, 2019
Particulars ` `

A. Cash Flow from Operating Activities
Net Profit before Tax (WN 1) 3,70,000
Adjustments for Non-cash and Non-Operating Items:
Add: Depreciation 1,25,000
Interest on Debentures (` 2,00,000 × 10/100 × 6/12) 10,000
1,35,000
Less: Profit on Sale of Machine 15,000 1,20,000
Operating Profit before Working Capital Changes 4,90,000
Add: Decrease in Current Assets and Increase in Current Liabilities:
Trade Receivables 2,00,000
Less: Increase in Current Assets and Decrease in Current Liabilities:
Inventories (2,00,000)
Trade Payables (1,20,000) (1,20,000)
Cash Generated from Operations 3,70,000
Less: Tax Paid 50,000
Cash Flow from Operating Activities 3,20,000